Japan faces a "diplomatic and security crisis", Prime Minister Shinzo Abe said Monday, a day after his defence minister announced plans to strengthen the military amid a bitter dispute with China.

The proposal to raise the defence budget by 40 billion yen ($441 million) or about 0.8 percent in the year starting from April sparked criticism from Beijing.

The plan also calls for a small increase in personnel for the 228,000-strong military, the first such rise in about 20 years.

Abe, in his first speech to parliament since taking office last month, spoke of "continuous provocations" faced by his country, "causing us to face a diplomatic and security crisis".

"By taking full measures to develop, manage and safeguard remote islands near our borders, I declare now that, under this cabinet, we will firmly defend the lives and property of Japanese people as well as our territories, territorial waters and territorial airspace," he added.

Tokyo's plans sparked criticism from Beijing amid the sovereignty dispute over an East China Sea island chain.

"Japan's moves in the military and security field will always be a high concern for its Asian neighbours," foreign ministry spokesman Hong Lei told reporters in Beijing.

"We hope the Japanese side can be committed to peaceful development, respect the concerns of the regional countries, take history as a mirror and do more for regional peace and stability."

Japanese Defence Minister Itsunori Onodera announced the proposed spending rise on Sunday.

He also said the military would add nearly 300 personnel to help defend the disputed islands which Tokyo calls the Senkakus but are known as the Diaoyus in China.

"With this budget, our existing aircraft can become fully activated. We will be able to build a stronger system" to monitor our territory, Onodera said.