Chinese coastguard ships sailed into waters off Japanese-controlled islands in the East China Sea on Wednesday, officials said, after Tokyo's annual defence paper warned over China's "dangerous acts" near the disputed archipelago.

The report, published Tuesday, said frequent appearances by Chinese ships in the area could lead to "unintended consequences", as fears grow over a potential military clash between the Asian powers.

Three Chinese vessels sailed into territorial waters that extend 12 nautical miles around one of the Senkaku islands, which China also claims and calls the Diaoyus, the Japanese coastguard said.

The ships entered the area around 10:00 am local time (0100 GMT) and left about two hours later, it said.

Despite the rising tensions, Japan and China's coastguard are currently taking part in three-day joint drills, which started Tuesday, alongside counterparts from the United States and Russia.

The peculiar timing saw coastguard members who sometimes play cat and mouse at sea taking part in diving drills, among other exercises.

Tokyo nationalised some of the islands nearly two years ago, setting off a diplomatic row with Beijing, although the two countries still occasionally work together on exercises such as the coastguard drills.

Since the dispute flared anew, Chinese vessels and aircraft have regularly approached the islands, with Japan's coastguard in hot pursuit.

China responded to Tuesday's defence paper by saying Japan was "deliberately creating a 'Chinese threat' as an excuse to adjust its military policy".

The paper may dent Japanese Prime Minister Shinzo Abe's bid to hold talks with Chinese President Xi Jinping during a regional meeting in Beijing in November.

Abe and Xi, both strong nationalists, have not held a bilateral summit since they both came to power more than 18 months ago.