The threat, made during inter-Korean economic talks in Pyongyang, was North Korea's first reaction to last week's meeting between Mr. Bush and South Korean President Roh Moo-hyun in Washington.
The two leaders said last week they would "not tolerate" atomic arms in North Korea. Mr. Bush and Roh said they would seek a peaceful solution to the nuclear standoff, but would consider "further steps" if Pyongyang escalates tensions.
A senior Bush administration official has said "further steps" could mean military action as well as "a lot of things in the toolbox."
North's Korea's chief negotiator, Pak Chang Ryon, criticized the summit on Tuesday, calling it "perfidious" and "an improper act of actively following (Washington's) policy to stifle the DPRK militarily and economically." DPRK stands for the Democratic People's Republic of Korea, North Korea's official name.
"The South side will sustain an unspeakable disaster if it turns to confrontation, talking about 'nuclear issue' and 'additional measures,'" he said in comments carried by the North's official news agency KCNA.
North Korea often makes similar belligerent statements.
The nuclear dispute flared in October, when U.S. officials said North Korea admitted it has a clandestine nuclear program.
Since early in the standoff, Pyongyang has pushed for bilateral talks between its government and Washington, but the U.S. has sought a multilateral solution featuring all the regional players.
Talks last month in Beijing, attended by U.S., North Korean and Chinese diplomats, were a compromise approach.
At the meeting, a North Korean envoy is said to have told a U.S. diplomat that the North already has nuclear arms, is ready to reprocess spent fuel rods into weapons material and could sell nuclear materials,
Mr. Bush plans to continue the regional approach this week when he meets Japanese Prime Minister Junichiro Koizumi. On Monday, a White House spokesman said there could be more meetings with the North Koreans.
"We have never said that there won't be additional talks," said Ari Fleischer. "In fact, I think that that is one of the things we are taking a look at, is the possibility of additional talks, what the appropriate time would be."
A Council on Foreign Relations report, meanwhile, declares that it is increasingly likely North Korea can and will move to produce additional nuclear weapons material.
It urges bilateral talks to reach a "verifiable nuclear settlement" that contains commitments by North Korea to end nuclear programs and allow inspections, and by the U.S. to end sanctions, establish normal diplomatic relations with Pyongyang, and refrain from military strikes if North Korea keeps up its end of the deal.
North Korea, which says it fears attack because of the new U.S. doctrine of preemptive war, has repeatedly asked for such a non-aggression pact. Washington says it has no intention of attacking, but has rejected the idea of a pact.
North Korea's Pak made his comments at the beginning of the economic talks to discuss inter-Korean projects, including cross-border railways and roads as well as an industrial complex that would be built near the border in North Korea.
But South Korean delegates said the projects could be hurt if Pyongyang creates further tension over its suspected nuclear weapons programs.
"It is our precondition that North Korea's nuclear issue should not deteriorate for smooth inter-Korean economic cooperation," South Korea's Vice Finance and Economy Minister Kim Gwang-lim, the chief South Korean delegate.
Kim said South Korea also needs to confirm that the rice aid it provides is distributed to the North Korean people before discussing further food aid to the poverty-stricken state, according to pool reports filed by South Korean reporters. South Korea provided North Korea with 400,000 tons of rice last year.