* S.Korean drills larger than previous exercises
* Drills include Aegis destroyer, special forces for firsttime
* Japan lodged protest with S.Korean embassy
* S.Korea and Japan in worsening political and economic feud(Adds details from South Korean navy official, paragraphs 8-9)
By Josh Smith
SEOUL, Aug 25 (Reuters) - South Korean forces began two daysof expanded drills on Sunday around an island also claimed byJapan, prompting a protest from Tokyo only days after Seoul saidit would scrap an intelligence-sharing pact with its neighbouramid worsening relations.
Tokyo and Seoul have long been at loggerheads over thesovereignty of the group of islets called Takeshima in Japaneseand Dokdo in Korean, which lie about halfway between the EastAsian neighbours in the Sea of Japan, also known as the EastSea.
The latest military drills began on Sunday and includednaval, air, and army forces, as well as marines, a South Koreanministry of defence official said.
The Japanese foreign ministry called the drills unacceptableand said it had lodged a protest with South Korea calling forthem to end.
The island is "obviously an inherent part of the territoryof Japan", Kenji Kanasugi, the director general at theministry's Asian and Oceanian Affairs Bureau, told the SouthKorean Embassy in Tokyo in a statement.
Ko Min-jung, a spokeswoman for South Korea's presidentialBlue House, said the drill was an annual exercise and not aimedat any specific country.
"It's an exercise to guard our sovereignty and territory,"she told reporters in Seoul.
The exercise included significantly more South Korean forcesthan previously involved and spanned a wider area in the seabetween South Korea and Japan, a South Korean navy official toldReuters.
For the first time the drills included an Aegis-equippeddestroyer and army special forces, the official said, speakingon condition of anonymity because of the sensitivity of theissue.
Tensions in the region have spiked amid a worseningpolitical and economic spat between South Korea and Japan, astring of missile launches by North Korea, and increasinglyassertive military patrols by China and Russia.
South Korea announced the scrapping of anintelligence-sharing pact with Japan on Thursday, drawing aswift protest from Tokyo and deepening a decades-old disputeover wartime history that has hit trade and undercut securitycooperation over North Korea.
Relations between South Korea and Japan began to deterioratelate last year following a diplomatic row over compensation forwartime forced labourers during Japan's occupation of Korea.
They soured further when Japan tightened its curbs onexports of high-tech materials needed by South Korea's chipindustry, and again this month when Tokyo said it would removeSouth Korea's fast-track export status.
The disputed islands have long been one of the mostsensitive areas of contention between Japan and South Korea.
A detachment of South Korean guards has been stationed theresince the 1950s and South Korea has conducted annual defencedrills in the area.
The current exercises had been delayed as relationsdeteriorated, Yonhap news agency reported.
In July, South Korea and Japan responded to what they saw asa violation of their air space near the islands by a Russianmilitary plane.
The South Korean navy said the drills were designed tounderscore its commitment to defending the broader area.
"The military has changed the name of the drills to 'EastSea Territorial Protection Exercise' reflecting the scale andmeaning of the drills to solidify the military's resolve toprotect the territory in the East Sea," the South Korean navysaid in a statement. Previous drills had been called the "DokdoDefence Exercise."(Reporting by Josh Smith; Additional reporting by TakashiUmekawa in TOKYO and Hyonhee Shin in SEOUL; Editing by StephenCoates)