South Korea's defence ministry said it will announce later on Wednesday the location of a US military THAAD anti-missile defence unit, a planned deployment that has angered China and prompted North Korea to threaten retaliation.

South Korea and the United States announced on Friday that they had made a final decision to deploy the Terminal High Altitude Area Defense (THAAD) defense system in the South to counter the missile threat from North Korea, amid escalating tensions between the allies and the North.

North Korea's military on Monday threatened to retaliate against the move by the South and the United States by taking "physical response" once the location and time of the deployment are decided.

South Korea's defence ministry said it will announce the site of the anti-missile system at 3 p.m. (0600 GMT) on Wednesday.

An area near the southeastern city of Daegu has been selected for the deployment, South Korean media reported on Wednesday. South Korea's defence ministry declined to confirm the reports.

The THAAD system will be paid for by the United States.

"The site and the foundation and facilities will be provided by us," South Korean Defence Minister Han Min-koo told a parliament committee on Wednesday.

"We have no plan whatsoever to buy the THAAD system."

Speculation in South Korean media about possible THAAD sites has fuelled protests from residents of areas mentioned.

South Korea's Defence Ministry said on Friday the selection of the site and an announcement would come "within weeks", with the goal of having the system operational by the end of 2017.

South Korea and the United States have said the THAAD system will only be used as defence against North Korea's growing nuclear and ballistic missile capabilities, but China swiftly protested the move saying it would destabilise the regional security balance.

THAAD is built by Lockheed Martin Corp and designed to defend against short- and medium-range ballistic missiles by intercepting them high in the Earth's atmosphere, or outside it. The United States already has a THAAD system in Guam.