The South Korean military Wednesday relaxed its highest-level combat readiness posture it had maintained at the border due to heightened tensions with North Korea, a military source said.

"The maximum alert order that had come down to the front-line military units is being downgraded," the source said.

The front-line soldiers, however, will remain in a tighter readiness posture than normal in consideration of the on-going Ulchi Freedom Guardian joint military exercise with the U.S., the source noted.

The North Korean military is also reducing its war readiness arrangements at the border, another source said, confirming that the communist country lifted the quasi-war state of its armed forces at noon on Tuesday.

Under the action, North Korean front-line artillery troops are returning to their normal stance from their ready-to-fire posture ordered since last week, he said.

North Korean security guards patrolling the Joint Security Area inside the truce village of Panmunjom are now seen armed with handguns instead of rifles, which they had carried since last Friday amid the heightened tensions, other officials said.

"It is yet to be seen whether the North would clearly come down to the normal level," they said.

At least until the end of the UFG set for Friday, the North may retain its military alertness to a certain extent, and the South will also adjust its defense posture accordingly, they noted.

Under a breakthrough deal reached early Tuesday, both Koreas agreed to stop acts of hostilities to defuse the tensions.

The rival Koreas were brought to the brink of a military clash after having a rare exchange of artillery fire last Thursday, with the North triggering the exchange with its initial firing of artillery shells at South Korean loudspeakers blaring anti-North propaganda.

The South started the psychological warfare at the border on Aug. 10 in retaliation for land mine blasts that seriously injured two South Korean soldiers. Seoul accused Pyongyang of planting the mines on the southern side of the Demilitarized Zone.

Following the shelling, North Korean leader Kim Jong-un declared a semi-state of war, ordering armed forces to stand with full combat readiness.

Major North Korean infiltration forces, special artillery troops and submarines had been forward deployed before being sent back to normal positions.

Some of the North Korean submarines that had left their bases for operations, have returned back, the officials said, citing surveillance results. (Yonhap)