The warning came amid a growing tussle between the government and the country's top five industrial giants over the proposed realignment of their overgrown empires.

Kim Date-dong, a top economic advisor to president Kim Dae-jung, accused the five conglomerates of monopolising liquidity. The five are the Hyundai, Samsung, Daewoo, LG and SK Groups.

"The five largest chaebols take the majority money market liquidity, we are planning to restrict them (from) using commercial paper and bonds," the advisor told reporters.

The presidential official also said the Chaebols were required to give up managerial control over some non-profitable operations, vowing to give incentives if they agree on voluntary reforms.

Economic officials have battled to reduce excess and overlaps in the country's financial andcorporate sectors as part of their efforts to extricate South Korea from crisis.