What is the background to the crisis?
Relations between the US and North Korea have been deteriorating since George Bush labelled North Korea part of an "axis of evil" in January 2002.
The following October, the US accused North Korea of developing a secret, uranium-based nuclear weapons programme.
Washington is not only concerned about the development of such weapons in North Korea, but also wants to curb Pyongyang's capacity to export missile and nuclear technology to other states or organisations.
Since the October 2002 confrontation, North Korea has restarted a mothballed nuclear power station, thrown out inspectors from the UN's International Atomic Energy Agency and pulled out of the Nuclear Non-proliferation Treaty.
It may be that North Korea has been trying to use the nuclear issue as a hard-line ploy to negotiate a non-aggression pact and improved economic aid from the US.
What is the immediate effect of North Korea's announcement?
If a nuclear test is confirmed, it will cement North Korea's place as a nuclear power, effectively ending hopes of resolving the stand-off through stalled six-nation talks.