It comes as the two countries are enmeshed in a row over Prime Minister Sanae Takaichi's suggestion in November that Tokyo could intervene militarily in any attack on Taiwan.

Tokyo and Beijing agreed in June 2008 to cooperate over oil and gas resources in the East China Sea, but negotiations stopped two years later and have not resumed.

"We have confirmed that a mobile drilling vessel has been moored and anchored in waters" on the Chinese side of the two countries' median line, Chief Cabinet Secretary Minoru Kihara said Thursday.

Japan's coastguard had issued a navigation warning on January 2, he added.

"The boundaries of the exclusive economic zone and continental shelf in the East China Sea have yet to be determined. Under these circumstances, it is deeply regrettable that China continues its unilateral development activities," Kihara said.

"We have strongly protested to China through diplomatic channels."

The operation is believed to be exploratory drilling for a new gas field, Kyodo news agency reported.

The gas field under the joint development agreement lies in an area where both countries' EEZs overlap.

Japan says the median line between the two nations should mark the limits of their respective EEZs.

But China insists the border should be drawn closer to Japan, taking into account the continental shelf and other features of the ocean.

Discussions over oil and gas resources in the area came to a halt due to rising tensions.

Relations are again under huge stress after Takaichi's comments about Taiwan triggered a sharp diplomatic backlash from China, which has urged its citizens to avoid travelling to Japan.

China claims Taiwan as part of its territory and has threatened to use force to bring it under its control.

Most recently, Beijing tightened controls on exports to Japan for items with possible military uses, which could potentially include vital rare earth minerals.