Seawater north of the plant was found to have 1,150 times the legal limit of iodine.
Highly radioactive water was detected seeping from a damaged atomic plant in Japan.
Japan criticized the Tokyo power company for an erroneously high radiation reading issued earlier.
Radiation from a crippled atomic plant northeast of Tokyo has wafted into the air, contaminating farm produce and drinking water as well as seeping into the Pacific Ocean, although officials stress there is no imminent health threat.
Highly radioactive water has been found seeping from reactor two's turbine building, the operator said Monday, worsening fears that it is leaking into the environment.
Engineers are racing to restore cooling systems knocked out by the tsunami, but have been hindered by pools of highly radioactive water thought to have leaked from the steel-and-concrete reactor casings or their pipe systems.
Embattled operator Tokyo Electric Power Company (TEPCO) came under fire Monday, a day after it erroneously said radiation in water at the stricken site had reached 10 million times the normal level.
It later issued a much lower -- but still dangerous -- figure.
Japan on Monday criticized as "absolutely unacceptable" the radiation reading blunder by the operator of a crippled atomic plant, where dangerous conditions have disrupted crucial work for two days.
Work has halted at reactor two of the Fukushima plant that is at the center of Japan's cascading disaster -- an earthquake that sparked a tsunami which in turn triggered the world's worst nuclear emergency since Chernobyl.
The number of people confirmed dead or listed as missing following the 9.0-magnitude quake and monster wave climbed above 28,000 on Monday, with 10,901 confirmed dead.
Adding to questions about the handling of the crisis, TEPCO said its president Masataka Shimizu, 66, took several days off from a joint emergency taskforce with the government due to sickness, but has now returned to work.
Shares in the beleaguered company plunged nearly 18 percent on the Tokyo Stock Market on Monday.
At a press conference TEPCO officials for the first time mentioned the possibility that the core pressure vessels of reactors one, two and three may all be damaged, Jiji Press news agency reported.
Telltale signs of nuclear fission -- radioactive iodine-131, caesium-137 and other isotopes -- have been detected in water that has flooded the basements of the three reactors' adjacent turbine buildings, halting work there.
"Given the high level of radioactivity in water in the turbine building of the number two reactor, we can presume water which came into direct contact with temporarily melted fuel in the containment vessel leaked out," Edano said.
Two workers, unidentified men in their 20s and 30s employed by a TEPCO subsidiary, were hospitalized last week after stepping in radioactive water without full-length boots.
TEPCO has faced heavy criticism and has apologized for not sufficiently briefing the workers, who were discharged on Monday without any sign of serious injuries, according to the radiological institute that examined them.
Work to restore power at reactor two has been suspended since Sunday because of the danger. The immediate focus is on draining the highly radioactive water from the turbine room basements, but without releasing it into the environment.
"We need to make sure this water does not leak into the ground and the sea," said Edano.
"It is very unfortunate that leaked water was directly exposed to melted fuel rods. Due to this we continue to do our utmost to prevent health hazards escalating," he added.
The water inside the reactor two turbine room was Sunday measured at 1,000 millisieverts an hour -- a dose that can cause temporary radiation sickness with nausea and vomiting for people who are exposed.
Pacific Ocean seawater just north of the plant was found to have 1,150 times the legal limit of iodine, the nuclear safety agency said Monday. Previous readings to the south reached more than 1,850 times the legal limit.
The Japanese government has ordered people to leave the area within 20 kilometers (12 miles) from the stricken plant and "encouraged" people to move out of places 20-30 kilometers away.
Environmental activist group Greenpeace said it had confirmed radiation levels of up to 10 microsieverts per hour in Iitate village, 40 kilometers northwest of the plant, and urged the government to evacuate the area.
"It is clearly not safe for people to remain in Iitate, especially children and pregnant women, when it could mean receiving the maximum allowed annual dose of radiation in only a few days," it said.