North Korea's missile move comes amid tense ties with Seoul
North Korea has announced that it is preparing to launch a rocket carrying a communications satellite.
It did not give a date for the launch, but said it would mark a great step forward for the communist state.
Correspondents say the statement is Pyongyang's clearest reference yet to what neighbours believe may be the imminent test of a long-range missile.
When it tested the Taepodong-1 missile in 1998, it claimed to have put a satellite in orbit.
In July 2006 it test-fired the three-stage long-range Taepodong-2, but the missile failed shortly after launch.
North Korea's move comes amid heightened tensions with South Korea, and with Pyongyang pushing for a top spot on the agenda of the new US administration.
The announcement came in a statement from the national space agency, carried by the official Korean Central News Agency (KCNA).
"Full-scale preparations are under way to launch a rocket Unha-2 to put communication satellite Kwangmyongsong-2 into orbit," it said.
"When this satellite is successfully launched, our space technology will make a great step forward toward becoming an economically strong country."
The launch is planned from a base in Hwadae in the northeast of the country, the statement said.
Satellite images showed activity at the site, but there was no missile on the launch pad, South Korea's Yonhap news agency reported, citing an intelligence official.
The base in Hwadae, called Musudan-ri, was where North Korea test-fired its long-range Taepodong-2 in 2006.
There are fears that the missile, with a theoretical range of 6,700 km (4,200 miles), could be used to target the US state of Alaska.
But when the missile was last tested, it failed within a minute and fell into the sea.
North Korea's move comes with talks on an aid-for-disarmament deal - involving the US, China, Russia, Japan and South Korea - currently stalled.
Relations between the two Koreas are also tense following South President Lee Myung-bak's decision to link the provision of bilateral aid to progress on denuclearisation. Pyongyang has recently scrapped several peace agreements with Seoul.
The mooted launch also follows speculation about the health of North Korean leader Kim Jong-il, who is believed to have suffered a stroke in mid-2008.
On a trip to Asia last week, the new US Secretary of State Hillary Clinton warned North Korea against any rash moves, saying a test-launch would be "unhelpful".
South Korean Defence Minister Lee Sang-hee urged North Korea to provide evidence to support its claim of a satellite, rather than missile, launch.
"Whether it is a missile or a satellite, it is similar technology. In either case, we believe it is a threatening act towards us and we are preparing to deal with it accordingly," he added.
Japan said it was currently assessing the situation and China said it had taken note of the matter, while calling for stability in the region.
North Korea tested a nuclear weapon in October 2006. But experts say it does not yet have the technology to make a nuclear warhead small enough to mount on a missile.