Japan and the US are dropping plans for a joint drill to simulate the retaking of a remote island from foreign forces amid a row between Tokyo and Beijing over a disputed archipelago, a report said.

The governments are set to cancel the drill as it could provoke further anger from China after a row escalated when Japan last month nationalised some of the disputed islands, also claimed by Beijing, Jiji Press reported late Friday.

The decision to cancel the drill, which would have involved an island that is not part of the disputed chain, was in line with the views of Prime Minister Yoshihiko Noda's office, the news agency quoted government sources as saying.

No official was immediately available for comment at the Japanese defence ministry.

According to earlier Japanese news reports, the exercise would have been part of broader joint Japan-US manoeuvres due to start in early November.

The drill would have used an uninhabited island, Irisunajima, near the main Okinawan island in southern Japan, and would have seen Japanese and US troops make an amphibious and airborne landing, the reports said.

Like the disputed islands, tiny Irisunajima is also in the East China Sea but hundreds of kilometres (miles) away from the archipelago at the centre of the row between China and Japan.

Japan and China have long been at loggerheads over the sovereignty of the rocky outcrops known as the Senkakus in Japan and Diaoyus in China.

The Tokyo-administered island chain is uninhabited, but the seabed below them is thought to contain valuable natural resources, such as oil.

The dispute flared in August and September with landings by nationalists from both sides and the subsequent nationalisation of the islands by Tokyo.