Japan on Monday turned back a Taiwan activist boat which approached a group of disputed islands in protest against a ship collision last week, the latest drama in a fast-escalating political dispute, officials said.

Japanese coastguard ships sprayed water into the air in front of the boat and nine accompanying Taiwan coastguard vessels 80 km (50 miles) from land, warning them to leave the area 2,000 km southwest of Tokyo, authorities from Taiwan and Japan said.

The vessel, with about 12 activists on board and many more media representatives, left the area after a peaceful standoff of several hours and are likely to be received well at home.

"This spontaneous action by the people, we can understand and support," said Hsieh Hsiu-chi, spokeswoman for Taipei County, from where the activists set out on Sunday. "The people here are very angry."

Japan outraged Taiwan by detaining the captain of a Taiwanese fishing boat that hit a Japanese coastguard ship on Tuesday.

The collision ignited a rare spat between two governments that normally get along but whose relations are in focus with the election of new Taiwan President Ma Ying-jeou.

The collision took place near what Japan calls the Senkaku isles and what China calls the Diaoyutai and Taiwan the Tiaoyutai. China also claims the eight uninhabited isles, which boast rich fisheries may lie near undersea oil and gas reserves.

"This is an opportunity to enhance Taiwan's bargaining position in order to negotiate fishery rights," said Andrew Yang, secretary general of the China Council of Advanced Policy Studies, a Taipei think tank. "In the past, the Japanese government was reluctant to negotiate this issue with Taiwan."

In Tokyo, Chief Cabinet Secretary Nobutaka Machimura expressed "regret" over the protest boats. Taiwan has urged Japan to apologise.

"The Senkaku islets are our territory, and this is extremely obvious in terms of history and international law," Machimura said. "It is necessary for the parties involved to respond calmly."

Taiwan recalled its foreign ministry representative in Japan on Saturday over Tokyo's handling of the ship collision. The Taiwan captain was released on Friday, but named in a Japanese investigation as a suspect.