The SLBM launch was believed to have taken place on Friday under the personal supervision of North Korean leader Kim Jong-Un, who described it as an "eye-opening success" that provided his military with a "world-level strategic weapon".
The exact nature of the test has yet to be independently confirmed, with some experts suggesting it was an ejection test, rather than a full flight test, with the missile only travelling a few hundred meters.
In a security meeting with ruling Saenuri party officials in Seoul, Defence Minister Han Min-Koo said the South's military would not sit idly by in the face of North Korean aggression.
"We will mercilessly retaliate to break their cycle of provocation," Han was quoted as saying by the Yonhap news agency.
"Retaliation against provocation is an order from the people," Han said.
Pyongyang has issued three warnings over the past week that it will fire on sight at South Korean navy patrol boats it says are routinely entering its territorial waters in the Yellow Sea.
South Korea has yet to comment publicly on the SLBM test, which was announced by the North's state media on Saturday.
A fully-developed SLBM capability would take the North Korean nuclear threat to a new level, allowing deployment far beyond the Korean peninsula and the potential to retaliate in the event of a nuclear attack.
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