North Korea says it will not retaliate despite "reckless provocations" from the South, which held live-fire drills on the flashpoint island of Yeonpyeong.
The North shelled the island last month after similar drills and had threatened more retaliation this time.
But state media quoted the army as saying it was "not worth reacting".
Meanwhile US politician Bill Richardson, on a visit to the North, says it has agreed to allow UN inspectors back into the country.
The New Mexico governor, who is in Pyongyang in an unofficial capacity, said he had been told during meetings that members of the International Atomic Energy Agency (IAEA) would be allowed renewed access to a uranium enrichment facility.
There has been no official comment from the North, and it is unclear which facility Mr Richardson was referring to.
Inspectors, who had been monitoring the Yongbyon nuclear plant, were expelled from the country in April 2009.
UN Security Council talks on North Korea ended without a deal at the weekend, reportedly after China refused to agree to a statement critical of its ally.
The South's government has been under huge domestic pressure to take a tough stance towards Pyongyang, in the wake of the 23 November shelling of Yeonpyeong, which killed four people.
'Make dialogue, not war'
The South ordered residents of Yeonpyeong and several other islands to take cover in air-raid shelters early on Monday.
Witnesses said the ground shook from the force of the artillery barrages during 90 minutes of firing.
South Koreans feared a military response from the North, but state news agency KCNA reported that the military was not planning any retaliation.
"The revolutionary armed forces of the DPRK [North Korea] did not feel any need to retaliate against every despicable military provocation," KCNA quoted the the army's Supreme Command as saying.
"The world should properly know who is the true champion of peace and who is the real provocateur of a war."
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