The unification ministry, which is in charge of cross-border relations, said it has asked 10 ministries or other organisations to suspend the spending.

Relations have worsened since an explosion sank a 1,200-tonne corvette near the disputed inter-Korean border on March 26 with the death of 46 sailors. Suspicions are growing that a North Korean torpedo was to blame.

Late Saturday the South fired warning shots after two North Korean patrol craft crossed the borderline in the Yellow Sea before retreating.

Further souring relations, the North last month confiscated or barred access to South Korean assets at a joint mountain resort on its east coast. It is angry at Seoul's refusal to resume cross-border tours there.

And on Sunday the North's military threatened to stop South Koreans crossing the land border and to take other "substantial" measures if leaflets criticising its regime keep arriving from the South.

Any border closure would deal a heavy blow to a jointly run industrial estate at Kaesong just north of the frontier.

A multinational investigation into the ship sinking will report by Thursday. The government will likely brief China, Russia and Japan on the results a day beforehand, Yonhap news agency quoted a source as saying.

Soon after the announcement, the source said, Seoul will send a letter to the chairman of the United Nations Security Council, the first step in seeking punishment by the world body for those responsible.

Foreign ministry spokesman Kim Young-Sun confirmed that unspecified "related nations" would be briefed in advance about the investigation results.

This was necessary "for our result to be acknowledged by international society as persuasive and objective".

Media reports say the South is also considering cutting trade with the North and the defence ministry has said it may resume anti-Pyongyang loudspeaker broadcasts across the border.

Last week the unification ministry urged South Korean companies to refrain from signing new deals or supplying resources to the North.

The North's military warned of "catastrophic consequences" if the South resumes the loudspeaker broadcasts.

On Monday the unification ministry said it was wrong to link border crossings to the launch of propaganda leaflets by private groups.

It says it has no legal power to stop the groups sending over the flyers via giant balloons.

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