North Korean leader Kim Jong Un says he wants to increase the country's nuclear arsenal "exponentially".
At a meeting of the ruling Workers' Party, Mr Kim said there was a need for "overwhelming military power" to defend the national interest against threats from countries such as South Korea and the US.
He said the two countries were trying to "isolate and stifle" the North, with US nuclear assets deployed in South Korea - a situation that is "unprecedented in human history", he said.
The official Korean Central News Agency quoted Mr Kim as saying: "The prevailing situation calls for making redoubled efforts to overwhelmingly beef up the military muscle... in response to the worrying military moves by the US and other hostile forces."
He described South Korea as "our undoubted enemy", adding that it is "hell-bent on imprudent and dangerous arms build-up".
"It highlights the importance and necessity of a mass-producing of tactical nuclear weapons and calls for an exponential increase of the country's nuclear arsenal," he added.
"We have declared our resolute will to respond with nuke for nuke and an all-out confrontation for an all-out confrontation."
The 38-year-old called for new intercontinental ballistic missiles to be developed, and for the country's first military satellite to be launched "at the earliest date possible".
It comes just hours after the country fired a ballistic missile over the sea to the east of the Korean Peninsula in the early hours of New Year's Day.
Pyongyang also launched three ballistic missiles on Saturday, capping off a year marked by a record number of missile tests.
There is growing speculation that it could be preparing to test a nuclear weapon for the seventh time.
The relationship between North Korea and South Korea has always been tense but it has worsened since Yoon Suk-yeol took over as the South's president, promising a tougher line against Pyongyang.