SEOUL (AFP) - South Korean troops traded fire near an elementary school on Sunday with a cornered conscript soldier who had fled after shooting dead five members of his unit on the border with North Korea.

The 23-year-old army sergeant, surnamed Lim, had opened fire on fellow soldiers at a guard post on the eastern section of the heavily guarded frontier Saturday night.

The shooting spree left five dead and seven wounded - and triggered a massive manhunt after Lee fled the scene armed with a K-2 assault rifle and a stash of ammunition.

A defence ministry spokesman said Lim, who had an apparent record of instability, had been tracked and cornered just before 2:30 pm (1:30 pm, Singapore time) on Sunday to a location 10 kilometers from the border.

"He shot at the pursuing troops and they returned fire," the spokesman said, adding that one officer had been wounded in the arm.

"The situation is still ongoing," he said.

Yonhap news agency said Lim's parents had been brought to the scene and had pleaded with their son to surrender.

Ms Kim So Rae, a college student who lives in a nearby village, said she had heard at least three separate exchanges of gunfire.

"It's pretty scary," she told YTN television shortly before the army ordered the villagers to evacuate their homes.

According to the military, Lim was due to be discharged in the next few months after completing his compulsory military service.

All those killed or wounded in Saturday's incident were members of Lim's unit, the 22nd infantry division, in the eastern province of Gangwon.

The army issued its highest state of alert in nearby areas during the search for Lim, which involved thousands of soldiers, Colonel Roh Jae Chun told reporters.

Special forces units and army helicopters were also brought in, while local residents were warned to stay indoors.

Lim had difficulty adapting to the military, and past psychological evaluations had advised senior officers to pay him special attention, a defence ministry official who wished to remain anonymous told AFP.

This is not the first time the 22nd infantry has been involved in such an incident.

In 1984 a private belonging to the same division opened fire and threw a grenade at fellow soldiers in their barracks, killing 15.

The soldier, Cho Jun Hee, then crossed the border to defect to the North, a move which Pyongyang's state media later confirmed.

The site of Saturday's shooting is just south of the Demilitarised Zone (DMZ) - a buffer strip that runs the full length of the 250-kilometre frontier.

The four-kilometre-wide DMZ - known as the world's last Cold War frontier - features guard posts manned by the rival armies, barbed wire and roads bisecting minefields.

Because the 1950-53 Korean War ended with a ceasefire rather than a peace treaty, the two Koreas technically remain at war.

Many of the South Korean soldiers on border duty are young male recruits doing their mandatory two-year military service.

These young men make up a large part of the South's 691,000-strong troop presence, compared to 1.17 million in the North.

Most of the victims in Saturday's shooting were conscripts, aged from 19 to 23.

The defence ministry issued a "sincere apology" over the incident.

"We pray for the souls of the victims and express our deepest regret for the victims, the injured and their families," it said.

Bullying and cruelty in the barracks have long tarnished the armed forces, and been blamed for suicides and similar shooting incidents.

In July 2011 a 19-year-old marine conscript killed four colleagues in a shooting spree on Ganghwa island near the border.

In June 2005 eight soldiers were killed and two seriously wounded when a 22-year-old conscript threw a grenade and sprayed bullets over sleeping colleagues at a frontline guard post north of Seoul.

In both those cases the men were court-martialled and sentenced to death, although the penalty was not carried out.

The armed forces have in recent years taken steps to stamp out bullying, which they called part of a "distorted military culture".