China's "coercive" behaviour in waters around islands at the centre of a bitter dispute with Japan is dangerous and could trigger an incident, Tokyo said in a new defence paper Tuesday.

At a cabinet meeting, hawkish Prime Minister Shinzo Abe and his ministers adopted the white paper, the first annual report on Japan's defence capabilities and regional security since the islands dispute flared anew last year.

Tokyo nationalised three of the five Senkaku islands in September. Beijing lays claim to the islands, and calls them the Diaoyus.

"China... has taken action described as coercive, which includes risky behaviour," the 450-page report said.

"China's activities include its intrusion into Japan's territorial waters, its violation of Japan's territorial airspace and even dangerous actions that could cause a contingency," it said.

In particular, the paper said a Chinese frigate locked weapons-targeting radar on a Japanese destroyer in January -- a claim Beijing has denied.

"These acts are extremely regrettable and China should accept and stick to the international norms," it said.

Chinese and Japanese ships have for months traded warnings over intrusions into what both governments regard as their sovereign areas around the islands, which are strategically sited and rich in resources.

Chinese government ships have regularly sailed into the 12 nautical mile territorial waters of the islands, where they are confronted by Japan's well-equipped coastguard.

The most recent incident was Sunday.

Masayoshi Tatsumi, press secretary at Japan's defence ministry, said the ministry was stepping up efforts to boost cooperation between the armed forces and coastguard in patrolling Japanese waters.

"We are taking all possible measures to maintain full readiness toward issues surrounding our country by using aircraft and other equipment in a flexible manner," Tatsumi said.

Japanese fighters were scrambled more than 300 times against Chinese planes flying near Japan's airspace for the year to March, a new record, the paper said.

Beijing's foreign ministry spokeswoman Hua Chunying said the white paper "makes some unfounded accusations against China".

"Recently Japan has often played up the so-called China threat and unilaterally caused tensions and confrontations," she said.

"Given that some political forces and politicians in Japan clamour for war preparations, military build-up and frequent military exercises, the international community cannot but be worried about where Japan is heading."

Japan has officially been pacifist since World War II but has 140,000 troops, 140 military ships and 410 aircraft as part of its "self-defence forces". It raised its military budget by 0.8 percent for the year to March, the first annual gain in 11 years, citing the need to boost island defences.

The defence paper also stressed the need to enhance the country's alliance with the United States in the face of China's increasingly assertive behaviour.

Ties with Washington had been strained under Japan's previous centre-left government, which pushed for the relocation of US bases in Okinawa. But under the conservative Abe, Japan has adopted a more nationalistic tone, to Beijing's concern.

Commentators say the disputed islands are a potential flashpoint for a possible military confrontation between Asia's two largest powers.

"Senkaku is strategically important for Japan, China and Taiwan," said Takehiko Yamamoto, professor of international politics at Waseda University in Tokyo.

Taiwan also claims the islands.

"Japan may need to work together with ASEAN (Association of Southeast Asian Nations) countries to jointly bring China to an arena of dialogue, but it will take some time," Yamamoto said.

Several members of ASEAN are also at loggerheads with China over separate territorial disputes in the South China Sea, which contains some of the world's most important shipping lanes and is believed to be rich in fossil fuels.

ASEAN has been pushing a reluctant China for talks on a set of rules governing conduct at sea meant to avert unilateral actions that could spark trouble.

At annual Asia-Pacific security talks a week ago, the Philippines warned that China was engaging in a military buildup at sea that threatened regional peace. China agreed at the talks to begin discussing a code of conduct with ASEAN.

The white paper is an assessment and summary of Japan's thinking on defence matters and is intended as an effort at transparency aimed at both the public and at neighbouring countires.

A policy paper that will discuss specifics on deployment of forces is expected later in the year.