Kyodo quoted Tang as saying in an interview in Beijing that the gas projects were one of the major issues dividing China and Japan at present, along with a dispute over the teaching of 20th Century history in Japanese schools and with Taiwan, Kyodo said.

Tang issued a strong warning on the dispute over the gas projects, saying that if Tokyo decided to give Japanese companies rights to conduct test-drilling it would "fundamentally change the issue", Kyodo said.

Japan said on April 1 that China needed to provide a "sincere" answer to Tokyo's demand that it halt the project or Japan would consider its own exploration in the area.

Trade Minister Shoichi Nakagawa said at the time that Japan would give China about a week to respond before proceeding to the next stage, which would involve designating exploration rights for gas fields in its EEZ, the first step towards test drilling.

The dispute is one of many straining ties between the Asian neighbours. Thousands of Chinese demonstrated over the weekend in Beijing and two southern cities to protest over what many Chinese see as Japan's failure to own up to wartime atrocities and Tokyo's bid for a permanent seat on the UN Security Council.

Japan has expressed concern that gas field development by China would draw reserves from geological structures that stretch under the seabed into its economic zone. It has demanded that Beijing provide data on the projects and halt them.

China has repeatedly refused to provide such data, but has suggested the two sides consider joint development of the area.