Radioactivity in water at reactor 2 at the quake-damaged Fukushima nuclear plant has reached 10 million times the usual level, company officials say.
Workers trying to cool the reactor core to avoid a meltdown have been evacuated.
Earlier, Japan's nuclear agency said that levels of radioactive iodine in the sea near the plant had risen to 1,850 times the usual level.
The UN's nuclear agency has warned the crisis could go on for months.
It is believed the radiation at Fukushima is coming from one of the reactors, but a specific leak has not been identified.
Leaking water at reactor 2 has been measured at 1,000 millisieverts/hour - 10 million times higher than when the plant is operating normally.
"We are examining the cause of this, but no work is being done there because of the high level of radiation," said a spokesman for the plant's operator Tokyo Electric Power Co (Tepco).
"High levels of caesium and other substances are being detected, which usually should not be found in reactor water. There is a high possibility that fuel rods are being damaged," the spokesman added.
Tepco has been criticised for a lack of transparency and failing to provide information more promptly.
The nation's nuclear agency said the operator of the Fukushima plant had made a number of mistakes, including worker clothing.
Meanwhile, the Japanese government said that airbone radiation around the plant was decreasing.
The plant was damaged in the deadly 11 March earthquake and tsunami.
The death toll has now passed 10,000, and more than 17,440 people are missing.
The UN nuclear watchdog, the International Atomic Energy Agency (IAEA), has now sent extra teams to the Japanese nuclear plant.
The radiation found in the sea will no longer be a risk after eight days because of iodine's half-life, officials say.