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The North said early Monday that it would cut off military phone lines with the South, the last remaining communications channel, in protest at a joint US-South Korean military exercise which started Monday.
It ordered its 1.2-million-member military to be fully combat-ready, saying the joint exercise was aimed at launching a "second Korean War."
"As an immediate measure we will enforce a more strict military control and cut off the north-south military communications," a military spokesman said.
"It is nonsensical to maintain a normal communications channel at a time when the South Korean puppets are getting frantic with the above-said war exercises, levelling guns at fellow countrymen in league with foreign forces."
South Koreans cannot cross the border without approval by North Korea through the military communications lines.
The unification ministry said the 726 includes those working in the complex and civilian groups trying to visit Kaesong for other purposes. It said truck traffic was also halted.
"They were supposed to visit Kaesong after winning approval from North Korea to cross the border. But they cannot go because communications lines were cut," a spokesman said.
There are now 572 South Koreans staying in Kaesong and 242 of them were supposed to cross back into South Korea on Monday. The ministry said it was not known yet whether they would be allowed to come back.
The Seoul-financed Kaesong estate was opened in 2005 as a symbol of reconciliation, with the North providing cheap labour and Seoul supplying the investment and know-how.
At the end of February about 39,000 North Koreans worked at 98 South Korean firms, producing items such as watches, clothes, shoes and kitchenware.
The firms truck raw materials across the border, with finished products going the other way for sale in South Korea.
Companies have already been hit by growing costs, the global economic downturn and difficulties caused by inter-Korean tensions.
In December, as relations with Seoul's conservative government soured further, Pyongyang restricted border crossings and expelled hundreds of South Korean managers from the estate.
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It ordered its 1.2-million-member military to be fully combat-ready, saying the joint exercise was aimed at launching a "second Korean War."
"As an immediate measure we will enforce a more strict military control and cut off the north-south military communications," a military spokesman said.
"It is nonsensical to maintain a normal communications channel at a time when the South Korean puppets are getting frantic with the above-said war exercises, levelling guns at fellow countrymen in league with foreign forces."
South Koreans cannot cross the border without approval by North Korea through the military communications lines.
The unification ministry said the 726 includes those working in the complex and civilian groups trying to visit Kaesong for other purposes. It said truck traffic was also halted.
"They were supposed to visit Kaesong after winning approval from North Korea to cross the border. But they cannot go because communications lines were cut," a spokesman said.
There are now 572 South Koreans staying in Kaesong and 242 of them were supposed to cross back into South Korea on Monday. The ministry said it was not known yet whether they would be allowed to come back.
The Seoul-financed Kaesong estate was opened in 2005 as a symbol of reconciliation, with the North providing cheap labour and Seoul supplying the investment and know-how.
At the end of February about 39,000 North Koreans worked at 98 South Korean firms, producing items such as watches, clothes, shoes and kitchenware.
The firms truck raw materials across the border, with finished products going the other way for sale in South Korea.
Companies have already been hit by growing costs, the global economic downturn and difficulties caused by inter-Korean tensions.
In December, as relations with Seoul's conservative government soured further, Pyongyang restricted border crossings and expelled hundreds of South Korean managers from the estate.
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