The warning came as military tensions on the divided Korean peninsula soared following a rare exchange of artillery fire yesterday that put the South Korean army on maximum alert.
"Our military and people are prepared to risk an all-out war not just to simply respond or retaliate, but to defend the system our people chose," North Korea's foreign ministry said in a statement on the official KCNA news agency, according to the South's Yonhap news agency.
Technically, the two Koreas have been at war for the past 65 years, as the 1950-53 Korean conflict ended with a ceasefire that was never ratified by a formal peace treaty.
Kim has given similarly bellicose orders in the past, most recently in 2013 when he declared "a state of war" with the South, although no clashes resulted.
Over the decades, South Koreans have become accustomed to the North's provocative and belligerent behaviour, and there was no sense of public panic in Seoul despite the dire threats.
South Korea's defence ministry insisted the loudspeakers would keep operating.
KCNA said Kim ordered frontline, combined units of the Korean People's Army (KPA) to "enter a wartime state" from Friday 5:00 pm (0830 GMT).
The troops should be "fully battle ready to launch surprise operations" while the entire frontline should be placed in a "semi-war state", KCNA quoted him as saying.
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