North Korea will launch the rocket to mark the 100th birthday of its late Great Leader Kim Il-sung in April, state media reported.
The US said the launch would threaten regional security and Russia described the plan as a "serious concern".
The move is seen as violating UN Security Council resolutions.
A spokesman for the Korean Committee for Space Technology said that the launch would take place between 12 and 16 April.
US Secretary of State Hillary Clinton called North Korea's announcement "highly provocative" and urged the country to abide by its international obligations.
"Such a missile launch would pose a threat to regional security and would also be inconsistent with North Korea's recent undertaking to refrain from long-range missile launches," she said in a statement.
A US state department spokesperson said it would be "hard to imagine" giving food aid to North Korea, as previously agreed, if Pyongyang went ahead with the rocket launch.
Neighbour South Korea said such a move would be a "clear violation" of UN Security Council Resolutions passed after a similar launch in 2009.
"It would be a grave provocation threatening the peace and security of the Korean peninsula and north-east Asia," the foreign ministry said in a statement.
Japan is particularly concerned as North Korea's April 2009 rocket was launched over the country.
The country's chief cabinet secretary, Osamu Fujimura, told a news conference on Friday that Japan had set up a crisis management taskforce to monitor the situation and was co-operating with the US and South Korea.
"We believe a launch would be a move to interfere with our effort toward a dialogue, and we strongly urge North Korea not to carry out a satellite launch," he said.
Last month, Pyongyang agreed to suspend long-range missile tests.
The agreement was part of a deal for the United States to supply 240,000 tonnes of food aid to North Korea.
It also agreed to suspend uranium enrichment and to allow back UN weapons inspectors as part of the deal.
In the launch three years ago, Pyongyang said the satellite made it into orbit and characterised it as a test of its satellite technology.
The move drew condemnation from the US and South Korea and led to the UN resolutions prohibiting the North from nuclear and ballistic missile activity.
Foreign officials said there were no indications that a satellite had reached space and that the launch was a cover for Pyongyang to test long-range missile technology.
The launch next month of a ''working satellite'', the Kwangmyongsong-3, is an opportunity for ''putting the country's technology of space use for peaceful purposes on a higher stage'', said a North Korean spokesman.
The rocket would be launched from the Solace Satellite Launching Station in Cholsan county, North Pyongan province on the country's west coast.
State media also reported that the North has already launched two experimental satellites.

The annual event sees dancing lions, acrobats and floats parade from Shaftesbury Avenue to Trafalgar Square.
The new year, also known as the Spring Festival, is based on the lunar Chinese calendar so it changes each year.
Each year is marked by one of 12 animals that appear on the Chinese zodiac. This year is the year of the Rooster.
The event in London is said to be one of the biggest outside Asia.

A parade and service was held at Blandford Camp where thousands of sailors from the Collingwood Battalion trained.
The Princess Royal attended the ceremony at the battalion's memorial.
The service commemorated those who died during the Third Battle of Krithia on the Turkish peninsula.
The battalion were almost totally destroyed during the eight-month campaign that was fought from 25 April 1915 to 9 January 1916.
More than 100,000 troops were killed and hundreds of thousands more were wounded.
The US and regional neighbours of North Korea have condemned Pyongyang's plans to launch a rocket-mounted satellite as an act of provocation.
[NEXT_CONCEPT]
Thousands of people have taken to the streets of central London to celebrate Chinese New Year.
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The centenary of the Gallipoli campaign - one of the bloodiest of World War One - has been marked with a memorial in Dorset.