Gates earlier announced that US and South Korean troops would hold joint exercises next weekend, a move criticised by North Korea and its only powerful ally, China.
US secretary of state Hillary Clinton and defence secretary Robert Gates on Wednesday visited the zone dividing the two Koreas, underlining support for Seoul in its latest standoff with the North.
Gates earlier announced that US and South Korean troops would hold joint exercises next weekend, a move criticised by North Korea and its only powerful ally, China.
"We continue to send a message to the North: that there is another way," Clinton said at the Demilitarised Zone (DMZ) that has divided the peninsula since the end of the 1950-53 Korean War and for which there is still no formal peace treaty.
"But until they change direction, the United States stands firmly on behalf of the people and the government of the Republic of Korea," said Clinton.
Nearly two million troops are located on either side of the 4 km wide, 245 km long border. Tension has risen on the peninsula after S Korea accused its hermit neighbour of sinking one of its warships in March, killing 46 sailors. Pyongayng denies it was responsible.
The United Nations’ security council issued a statement condemning the sinking but, under apparent pressure from China, did not name N Korea as the culprit.
Clinton and Gates peered through binoculars at observation point Ouellette, a sand-bagged perch on a hilltop manned by the US and S Korean soldiers. Under a slight drizzle, a massive North Korean flag was flying in the distance.
N Korean television late on Tuesday denounced the planned US-South Korea naval and air exercises that begin July 25 off the Korean peninsula's east coast.
"The naval exercises threaten our territory and the peace and security of our country," factory worker Rim Dong-hun told N
Korean state television. "It makes my blood boil."
China, North Korea's closest ally, has also criticised the drills. On Tuesday, Chinese state television showed China's own navy was conducting exercises that included helicopters and a submarine.
North Korea, increasingly isolated from the international community by sanctions following two nuclear tests and the sinking of a South Korean ship, is desperate for aid and investment to help its crumbling economy.
"In the 20 years since I last climbed that observation tower and looked out across the DMZ, it's stunning how little has changed up there and yet how much South Korea continues to grow and prosper," said Gates. "The North, by contrast, stagnates in isolation and deprivation."
S Korea, a generous aid and investment partner for a decade under liberal presidents, has all but cut contact with North Korea under conservative president Lee Myung-bak.
Pyongyang, though it routinely denounces Lee as a 'traitor', has recently signalled it wants a return to de-nuclearisation talks with regional powers that stalled in 2008.
"The South Korea-US alliance is a strong deterrent to North Korea," said Tom Byrne, a senior vice president at credit rating agency Moody's. "China is also interested in stability on the Korean peninsula and will not bankroll any invasion."