Japan's navy is chasing an unidentified submarine which was spotted inside the country's waters on Wednesday.
Japan's defence agency is yet to confirm the sub's identity
The Japanese defence agency reportedly believes the sub is Chinese because of its cruising sound, but a cabinet spokesman refused to confirm this.
Hiroyuki Hosoda said identifying the sub was difficult because it had not surfaced and did not appear to be heading towards a specific country.
It was spotted off the southern island of Okinawa, and left soon afterwards.
"We are chasing after the submarine, which is underwater," Mr Hosoda told a news conference on Thursday, adding the vessel was heading north.
"Once we find out the nationality of the submarine, we would take appropriate measures," Mr Hosoda said.
The defence agency said two Japanese destroyers and a surveillance plane had trailed the vessel through the night.
The Chinese foreign ministry said it did not know the vessel's nationality.
"The Chinese side is now paying close attention to this issue and I do not approve or encourage any random suppositions on this question," Foreign Ministry spokeswoman Zhang Qiyue told reporters at a
briefing in Beijing.
"As to whether this is a Chinese submarine, I do not know and I cannot provide you any information on this," she said.
Japan's Prime Minister Junichiro Koizumi called the incident "regrettable".
The last time Japan ordered such a high maritime alert was in 1999, when two suspected North Korean ships entered its waters.
The sub was first spotted near the Sakishima islands, which lie about 120km (75 miles) south of the disputed Senkaku islands - known as the Diaoyu in Chinese.
The incident comes at a time of heightened tensions between the two countries, which are likely to become increasingly competitive in their hunt for natural resources to power their economies.
The two sides held inconclusive talks last month on gas exploration projects in the East China Sea.
China has also reportedly been angered by a Japanese defence ministry paper which speculated on reasons China might attack. It cited disputes over natural resources and territory, as well as a wider conflict involving Taiwan.
The other possible source of the submarine is North Korea.
In December 2001, a suspected North Korean spy ship sank off Japan after a shoot-out with Japan's coast guard.