A suspected breach in the reactor at the stricken Fukushima nuclear plant could mean more serious radioactive contamination, Japanese officials have said.
The prime minister called the country's fight to stabilise the plant "very grave and serious".
A sombre Prime Minister Naoto Kan sounded a pessimistic note at a briefing hours after nuclear safety officials announced what could be a major setback in the urgent mission to stop the plant from leaking radiation.
"The situation today at the Fukushima Dai-ichi power plant is still very grave and serious. We must remain vigilant," Kan said. "We are not in a position where we can be optimistic. We must treat every development with the utmost care."
His warning came two weeks after a devastating earthquake and tsunami disabled the plant.
The escalation in the nuclear plant crisis came as the death toll from the quake and tsunami passed the grim milestone of 10,000.
Across the battered north-east coast, hundreds of thousands of people whose homes were destroyed still have no power, no hot meals and, in many cases, no showers for 14 days.
The uncertain situation halted work at the nuclear complex, where dozens had been trying to stop the overheated plant from leaking dangerous radiation.
The plant has leaked some low levels of radiation, but a breach could mean a much larger release of contaminants.
The government has already ordered people living 12 miles (20 kilometres) from the plant to evacuate because of radiation leaks.
Today, government spokesman Yukio Edano reaffirmed that people farther away from that limit were safe, but that those within 20 miles (30 kms) of the plant should stay indoors.
He added that since supplies are not being delivered to the area fast enough, it may be better for residents to voluntarily evacuate to places with better facilities.
"If the current situation is protracted and worsens, then we will not deny the possibility of (mandatory) evacuation," he said.
The possible breach in Unit 3 might be a crack or a hole in the stainless steel chamber of the reactor core or in the spent fuel pool that is lined with several feet of reinforced concrete.
The temperature and pressure inside the core, which holds the fuel rods, remained stable and was far lower than that which would further melt the core.
Suspicions of a possible breach were raised when two workers waded into water 10,000 times more radioactive than levels normally found in water in or around a reactor and suffered skin burns, the Nuclear and Industrial Safety Agency said.
Water with equally high radiation levels was found in the Unit 1 reactor building, Tokyo Electric officials said.
Water was also discovered in Units 2 and 4, and the company said it suspects that, too, is radioactive. It was not clear whether the water in each unit came from the same source, officials said, but acknowledged the discovery would delay work inside the plant
Kan apologised to farmers and business owners for the toll the radiation has had on their livelihoods: Several countries have halted some food imports from areas near the plant after milk and produce were found to contain elevated levels of radiation.
His spokesman said earlier in the day that "the government and the primary owner (Tokyo Electric Power) should be held responsible for compensation" to farms subject to restrictions on shipments.
Kan also thanked utility workers, firefighters and military personnel for "risking their lives" to cool the overheated facility.
The alarm comes two weeks to the day since the magnitude-9 quake triggered a tsunami that enveloped cities along the north-eastern coast and knocked out the Fukushima reactor's cooling systems.
Police said the official death toll jumped past 10,000. With the cleanup and recovery operations continuing and more than 17,400 listed as missing, the final number of dead was expected to surpass 18,000.
The nuclear crisis has compounded the challenges faced by a nation already saddled with a humanitarian disaster.
Much of the frigid north-east remains a scene of despair and devastation, with Japan struggling to feed and house hundreds of thousands of homeless survivors, clear away debris and bury the dead.
A breach could mean a leak has been seeping for days, most likely since the hydrogen explosion at Unit 3 on March 14.
It is not clear if any of the contaminated water has run into the ground. Radiation readings for the air were not yet available but detections in recent days have shown no significant spike.
But elevated levels of radiation have already turned up in raw milk, seawater and 11 kinds of vegetables, including broccoli, cauliflower and turnips. Tap water in several areas of Japan - including Tokyo - also showed radiation levels considered unsafe for infants, who are particularly vulnerable to cancer-causing radioactive iodine, officials said.
The scare caused a run on bottled water in the capital, and Tokyo municipal officials are distributing it to families with babies.
Previous radioactive emissions have come from intentional efforts to vent small amounts of steam through valves to prevent the core from bursting. However, releases from a breach could allow uncontrolled quantities of radioactive contaminants to escape into the surrounding ground or air.
Government spokesman Edano said "safety measures may not be adequate" and warned that may contribute to rising anxiety among people about how the disaster is being managed.
"We have to make sure that safety is secured for the people working in that area. We truly believe that is incumbent upon us," the chief Cabinet secretary told reporters.
NISA spokesman Hidehiko Nishiyama said later that plant operator Tokyo Electric Power Co was issued a "very strong warning" for safety violations and that a thorough review would be conducted once the situation stabilises.
Meanwhile, damage to factories was taking its toll on the world's third-largest economy and creating a ripple effect felt worldwide.
Nissan Motor Co said it may move part of its engine production line to the US because of damage to a plant.
The quake and tsunami are emerging as the world's most expensive natural disasters on record, wreaking up to 310 billion dollars (£200 billion) in damages, the government said.
"There is no doubt that we have immense economic and financial damage," Finance Minister Yoshihiko Noda said. It will be our task how to recover from the damage."
At Sendai's port, brand new Toyota cars lay crushed in piles. At the airport, flooded by the tsunami on March 11, US Marines used bulldozers and shovels to shift wrecked cars that lay scattered like discarded toys.
Still, there were examples of resilience, patience and fortitude across the region.
In Soma, a hard-hit town along the Fukushima prefecture coast, rubble covered the block where Hiroshi Suzuki's home once stood. He watched as soldiers dug into mounds of timber had been neighbours' homes in search of bodies. Just three bodies have been pulled out.
"I never expected to have to live through anything like this," he said mournfully. Suzuki is one of Soma's lucky residents, but the tsunami washed away the shop where he sold fish and seaweed.
"My business is gone. I don't think I will ever be able to recover," said Suzuki, 59.
Still, he managed to find a bright side. "The one good thing is the way everyone is pulling together and helping each other. No one is stealing or looting," he said.
"It makes me feel proud to be Japanese."Reuse content