"Although not completely fit, he appears well enough to perform his daily duties," National Intelligence Service Director Kim Sung-ho was quoted as saying.
"We also believe Kim's eldest son made a trip to France last week," the intelligence chief added, concerning recent reports that Kim Jung-nam had visited Paris to hire a leading neurosurgeon to treat his father.
Japanese Prime Minister Taro Aso said on Tuesday that Kim Jong-il was probably in hospital, but was unlikely to be completely incapacitated.
"While his condition is not very good, it is unlikely that he can't make any decisions," he said citing, intelligence sources in various countries.
South Korean President Lee Myung-bak said last week that Kim Jong-il was in control of his country and no changes were expected in the communist state.
South Korean and U.S. officials say the North Korean leader suffered a stroke earlier this year, and may have undergone brain surgery.
North Korea warned on Tuesday that it would carry out military strikes against the South if activists continue to send propaganda leaflets criticizing the regime and "slandering" leader Kim Jong-il.
"Should the South Korean puppet authorities continue scattering leaflets and conducting a smear campaign with sheer fabrications, our army will take resolute practical action, as we have already warned," Pyongyang's official Korean Central News Agency cited a military spokesman as saying.
An "advanced pre-emptive strike" would reduce South Korea "to debris", the spokesman said.
Recent leaflets have mentioned Kim Jong-il's deteriorating health, a highly sensitive subject in the North, and have encouraged North Koreans to rise up against the communist regime. On Monday, tens of thousands of leaflets were launched towards the North from a boat.
