Chief Cabinet Secretary Yukio Edano said workers needed to withdraw from the Fukushima Dai-ichi complex as they were dousing the reactors in a frantic effort to cool them.
"The workers cannot carry out even minimal work at the plant now," Edano said. "Because of the radiation risk we are on standby," he said.
Earlier Wednesday, more than 140,000 people were ordered to stay indoors after dangerous levels of radiation leaked from a damaged nuclear plant. Japanese officials were considering asking the Japanese and U.S. military to spray water from helicopters to cool the reactors.
In a nationally televised statement, Prime Minister Naoto Kan said radiation had spread from the four reactors of the nuclear plant along Japan's northeastern coast.
Unease remained in the island nation as it tried to recover from the magnitude-9.0 earthquake and subsequent tsunami believed to have killed more than 10,000 people and battered the world's third-largest economy. The confirmed death toll was 3,300.
Some 450,000 people remained in shelters and 150 people tested positive for exposure to radiation.
There was a bit of positive news in terms of the radiation level when officials from the International Atomic Energy Agency reported that the levels of radiation at the site came down a little bit. But later, an official told ABC News that the data was constantly changing. Officials are wondering if the wind is to blame for the up and down readings.
The official told ABC News that as long as there are hot fuel rods and no water pumps circulating consistently, there is no sign that the situation was moving in a positive direction.
The agency said the amount of radiation that's safe to ingest a year is about 2.4 mSv. Earlier on Tuesday, the Fukushima plant was leaking 11.9 mSv per hour. But in six hours, that level dropped to 0.6 mSv per hour.
There is a no-fly zone over a 20-mile radius around the nuclear power plant due to fears that radioactive particles leaking from the complex into the atmosphere could enter passing aircraft.
Officials ordered 140,000 people living within a 19-mile radius of the Fukushima Dai-ichi nuclear plant to shelter in place. Residents are being told to stay inside, close their windows, turn off their air conditioning and take down all their outside laundry.
Evacuation orders are in effect for 800 workers at the plant. Only 50 remain to do essential work.
A new fire broke out Wednesday at a nuclear reactor that had been extinguished a day before.
The initial explosion and fire emitted a burst of radiation and escalated the nuclear crisis. After the fire was extinguished, a Japanese official said that a pool where used nuclear fuel is kept cool might be boiling. That reactor, Unit 4, had been shut down before the quake for maintenance.
If the water boils, it could evaporate, exposing the rods. The fuel rods are encased in safety containers meant to prevent them from resuming nuclear reactions, nuclear officials said, downplaying the risk of that happening.
A U.S. nuclear industry official said that falling pressure inside the suppression pool at the No. 2 reactor and reports of rising radiation levels there raise the possibility that the reactor's containment has been breached. The official said the breach could lead to the release of more radioactive materials.
Japan's nuclear safety agency said it was likely that 70 percent of the nuclear fuel rods in Unit 1 may have been damaged after an explosion.
"We don't know the nature of the damage, and it could be either melting, or there might be some holes in them," said agency spokesman Minoru Ohgoda.
Officials also said another unit's fuel rods suffered 33 percent damage and two plant workers were missing.
Many people are being tested by the government for dangerous radiation levels.
Nuclear expert Joe Cirincione said the worst case scenario for the plant is if the reactor cores "get so hot they fuse into a molten mass that burst through the containment structures spewing radioactivity into water, air and ground."
Hundreds of aftershocks have shaken Japan's northeast and Tokyo since the original offshore quake, including one Tuesday night whose epicenter was hundreds of miles southwest and inland.
The potential of a nuclear disaster remained on the conscious of those living in Tokyo.
"I'm hoping that it's not true and that the reports are overblown," said Darren Dunn, an American living in Tokyo. "The last I heard is they were telling people within 30 kilometers of the plant to stay in their houses. We're about 200 miles away from it, roughly. I'm hoping that's far enough away that there aren't going to be any problems or that even if it does come this way it's going to disperse."
The Associated Press contributed to this story.
