Yomiuri Shimbun said the diplomats received the instruction several days ago. It quoted unnamed sources as saying they were told to cancel all business trips.
Analysts say the news could be connected with the deteriorating health of North Korea's reclusive leader Kim Jong-il, or with relations between the two Koreas.
North Korea threatened on Thursday to sever all relations with the South unless President Lee Myung-bak ends his "confrontational" policies.
South Korean analysts have interpreted the North Korean threat as an attempt to create a rift between Seoul and Washington, and boost Pyongyang's bargaining position in international talks on its denuclearization.
South Korea's President Lee, who took office in February, has strengthened ties with the U.S., while warning that further economic aid to the North could be withheld if Pyongyang fails to meet its nuclear disarmament commitments. He has also pledged to review agreements on bilateral economic projects agreed at North-South summits.
His stance has come as a sharp contrast to that of his two predecessors, who agreed to massive subsidies for the impoverished North in a drive to rebuild relations.
The North Korean commentary, published in the official newspaper of the ruling Workers' Party, accused Lee of "trampling" on the summit agreements in pursuit of confrontation with the Pyongyang.
The United States recently removed North Korea from its terrorism blacklist. In response, the North said it would restart work to disable its nuclear facilities.