Vietnamese Prime Minister Nguyen Tan Dung said Wednesday that China's placing of an oil rig in contested South China Sea waters had "seriously threatened peace".

Speaking in Manila after meeting Philippine President Benigno Aquino, Dung said the leaders agreed that China should be condemned by the international community for the oil rig deployment and many other illegal actions in the sea.

"With regard to the situation in the East Sea, the president and I shared the deep concerns over the current extremely dangerous situations caused by China's many actions that violate international law," Dung said, standing alongside Aquino at the presidential palace.

"In particular, China's illegal placement of the oil rig Haiyang 981 and deployment of escorting vessels to protect the rig... have seriously threatened peace, stability, maritime security and safety and freedom of navigation in the East Sea."

Vietnam refers to the South China Sea, which is believed to contain vast deposits of oil and gas, as the East Sea.

China claims nearly all of the sea, even waters approaching the coasts of its neighbours.

Vietnam, the Philippines, Brunei and Malaysia, as well as Taiwan, have competing claims to parts of the sea, and the disputes have for decades made it a potential trigger for conflict.

China gained control of the Paracel islands in 1974 after a battle with South Vietnam that left about 50 Vietnamese military personnel dead.

Dozens more Vietnamese troops were killed in another losing battle with China for control of Johnson Reef in the Spratlys archipelago to the south of the Paracels.

- New tensions flare -

Tensions have risen in recent years as Vietnam and the Philippines have accused China of becoming increasingly aggressive in asserting its claims to the waters.

In 2011, Vietnam accused Chinese marine surveillance vessels of cutting an oil survey ship's exploration cables, sparking nationalist protests in Vietnamese cities.

Anti-China rage erupted again last week in Vietnam because of the oil rig deployment, as dozens of Chinese and Vietnamese vessels engaged in repeated skirmishes in the hotspot area.

Four Chinese nationals died in last week's riots, according to China, which has insisted it has indisputable sovereign rights to all of the contested waters.

The Philippines has also faced increasingly tense tussles with China for control of islets and reefs in the sea over recent years.

In one high-profile incident in 2012, the Philippines lost control of a rich fishing ground 220 kilometres (135 miles) off its main island after initially deploying its largest naval ship against Chinese vessels but then withdrawing.

The Philippines lodged an appeal in March with a United Nations tribunal to rule that China's claims to most of the sea are illegal. China has refused to participate in the proceedings.

Dung and Aquino said on Wednesday that their disputes with China had drawn their countries closer in defence and other spheres, as they announced they would start working towards achieving a strategic partnership.

The Philippines has a strategic partnership with just two nations, the United States and Japan, cementing closer ties across all types of relations, including security, economic and cultural.

"We have decided to elevate bilateral ties to a higher plane to allow us to establish a strategic partnership between the two countries in the interests of our people and... peace, cooperation and development," Dung said.

Aquino's comments on Wednesday regarding the territorial disputes with China were less forceful than Dung's, although he also emphasised the importance of the Philippines and Vietnam working together against "common challenges".

"I believe continued cooperation between the Philippines and Vietnam will enable us to better protect our maritime resources," Aquino said.

In Shanghai, Chinese President Xi Jinping told a security forum on Wednesday that China was not a threat to regional peace.

"China stays committed to seeking peaceful settlement of disputes with other countries over territorial sovereignty, and maritime rights and interests," he said.