Chief Cabinet Secretary Osamu Fujimura said three Chinese fishery patrol ships entered waters near the uninhabited islands, known as Senkaku in Japan and Diaoyu in China.
The islands, claimed Beijing and Tokyo as well as Taipei, are located near rich fishing grounds and potentially huge oil and gas reserves.
Japan said last week it was considering a plan to buy the islands from private landowners instead of letting the nationalist governor of Tokyo go ahead with a similar plan, a move diplomatic experts said may have been intended to dampen tensions but which risked backfiring and sending Sino-Japanese ties into a deep chill.
"It is clear that the Senkaku islands are inherently Japanese territory from a historical point of view and in terms of international law and that they are under the effective control of Japan," Fujimura told a news conference.
The three Chinese ships later left the waters but two of them were still sailing in the contiguous zone as of 10:30 a.m. (0130 GMT), with Japanese patrol ships keeping close watch, he said.
China's official Xinhua news agency said the patrol vessels had entered the waters "to carry out a fishery protection mission in our exclusive economic zone" and repeated that the islands and surrounding waters have been Chinese territory since ancient times.
Japanese Prime Minister Yoshihiko Noda, a conservative who has shifted Japan's diplomacy back toward a focus on U.S. security ties after his ruling Democratic Party's brief flirtation with a more Asia-centred stance, said on Saturday that the central government was considering buying the isles.
His comments came months after outspoken Tokyo Governor Shintaro Ishihara first floated his own scheme for the Tokyo Metropolitan Government to purchase three of the islands, currently privately owned by Japanese nationals and leased to the central government, to "protect" them from Chinese maritime incursions.
Ties between the giant Asian neighbours, long plagued by Beijing's bitter memories of Japan's past militarism and by rivalry over resources and regional clout, plummeted in 2010 after Japan detained the skipper of a Chinese trawler whose boat collided with two Japanese patrol ships near the islands.
