Japanese Prime Minister Naoto Kan has said his government is in a state of maximum alert over the crippled Fukushima nuclear plant.
Plutonium has been detected in soil at the facility and highly radioactive water has leaked from a reactor building.
Officials say the priority remains injecting water to cool the fuel rods.
Mr Kan told parliament the situation at the quake-hit plant "continues to be unpredictable".
The government "will tackle the problem while in a state of maximum alert", he said, adding that he was seeking advice on whether to extend the
evacuation zone around the plant.
Meanwhile National Strategy Minister Koichiro Gemba said the government could consider temporarily nationalising Tepco, the company running the plant.
On Monday shares in the company dropped to their lowest level in three decades.
'Utmost efforts'
Chief Cabinet Secretary Yukio Edano, in another press briefing, described the situation at Fukushima as "very grave".
Workers are battling to restore power and restart the cooling systems at the stricken nuclear plant, which was hit by a powerful quake and subsequent
tsunami over two weeks ago.
The twin disasters are now known to have killed 10,901 people, with more than 17,000 people still missing across a swathe of northern Japan.
"We are doing our utmost efforts to contain the damage," Mr Edano said.
"We need to avoid the fuel rods from heating up and drying up. Continuing the cooling is unavoidable... We need to prioritise injecting water."
But he said work to safely remove contaminated water was also a priority.
On Monday highly radioactive water was found for the first time outside one of the reactor buildings at Fukushima plant.
The leak in a tunnel linked to the No 2 reactor has raised fears of radioactive liquid seeping into the environment.
Plutonium - used in the fuel mix for one of the six reactors - has also been found in soil at the plant, but not at levels that threaten human health,
officials say.
During the day, these frail, crumpled people sit bundled up in blankets around the space heater that is inadequate to warm the large common room”
On Sunday it said radiation levels at reactor No 2 were 10 million times higher than normal, before correcting that figure to 100,000 - something the
government called "absolutely unacceptable".
It has also been accused of a lack of transparency and failing to provide information more promptly.
Officials in China, South Korea and the United States say they have recorded traces of radioactive material in the air.
The US Environmental Protection Agency said it had detected traces of radiation in rain water in the north-east of the country.
It said these were consistent with the Fukushima nuclear accident and also said they did not constitute a health hazard.
FUKUSHIMA UPDATE (29 MAR)
Reactor 1: Damage to the core from cooling problems. Building holed by gas explosion. Highly radioactive water detected in reactor
Reactor 2: Damage to the core from cooling problems. Building holed by gas blast; containment damage suspected. Highly radioactive water detected in
reactor and adjoining tunnel
Reactor 3: Damage to the core from cooling problems. Building holed by gas blast; containment damage possible. Spent fuel pond partly refilled with
water after running low. Highly radioactive water detected in reactor
Reactor 4: Reactor shut down prior to quake. Fires and explosion in spent fuel pond; water level partly restored
Reactors 5 & 6: Reactors shut down. Temperature of spent fuel pools now lowered after rising high
Plutonium: Found at five locations in soil - levels said to represent no danger to human health