BBC Seoul correspondent Andrew Wood witnesses the protests

Despite the action being declared illegal by the government thousands of strikers sat outside industrial headquarters like car-makers Daewoo in Seoul, chanting their protests against the government and the IMF.

Riot police were on standby but as the protests continued peacefully they remained in their buses parked nearby.

The organisers of the strike, the Korean Confederation of Trade Unions (KCTU), want the government to renegotiate the terms and conditions of last year's record $57 billion IMF rescue package.

KCTU spokesman Yoon Young Mo:"We are calling for consultation."

The reforms set out in the deal include allowing companies to sack workers for the first time. As a result, tens of thousands of workers have lost their jobs. The car giant Hyundai plans to sack a quarter of its workforce.

Unions say that companies are not following agreed procedures and are sacrificing workers instead of managers.

Jobless people in Seoul waiting for free meals cover their faces to prevent their identity

Overnight talks between the KCTU and representatives from various companies failed to avert the stoppage.

The government has declared the strike illegal, and threatened to prosecute the organisers. In a public statement, state prosecutors urged employers to lock out workers if the strike goes on too long, and to adopt a "no work, no pay" policy against strikers. The trade unions have warned they could extend the action if force is used.

Share prices remain low

South Korea received largest ever bail-out package

The BBC Seoul correspondent, Andrew Wood, said workers feel they are being sacrificed while the big conglomerates, or chaebol, are left relatively intact.

He said the mood at the rally in the centre of Seoul is angry but so far not violent. However, riot police are standing by.

BBC Seoul correspondent, Andrew Wood: "production lines are quiet"

Our correspondent said the unions are playing a dangerous game - the longer strikes go on, the less likely it will be that international investors will want to place their money in the country.

Analysyts say share prices in Seoul narrowly avoided falling below the psychologically important 300 point barrier, the crucial period coincided with workers downing tools at 13:00 local time (04:00 GMT) before rallying slightly to finish up 0.48% on the back of bargain hunting and trading in blue chip companies.