Japan protested to China over the incident but China brushed the complaint off saying the flight by the Chinese aircraft was "completely normal".
Sino-Japanese relations took a tumble in September after Japan bought the tiny islands, called Senkaku in Japan and Diaoyu in China, from a private Japanese owner.
Patrol ships from the two countries have been shadowing each other since then in a standoff that has raised concern that a collision could escalate into a clash. Thursday's incident was the first time both sides used aircraft in the dispute.
"Despite our repeated warnings, Chinese government ships have entered our territorial waters for three days in an row," Japanese Chief Cabinet Secretary Osama Fujimura told reporters.
"It is extremely regrettable that, on top of that, an intrusion into our airspace has been committed in this way," he said, adding that Japan had formally protested through diplomatic channels.
Japan's military scrambled eight F-15 fighter jets, the Defence Ministry said. Japanese officials later said the Chinese aircraft had left the area.
It was the first time a Chinese aircraft had intruded into Japan's airspace near the disputed islands, Japan's Defence Ministry said.
Japanese Prime Minister Yoshihiko Noda later instructed the government to be "all the more on guard", the Kyodo news agency reported.
China's state maritime agency said a marine surveillance plane had joined four Chinese vessels patrolling around the islands and the fleet had ordered Japanese boats to leave the area immediately.
"The Diaoyu islands and affiliated islands are part of China's inherent territory. China's flight over the islands is completely normal," Chinese Foreign Ministry spokesman Hong Lei told a briefing in Beijing.
Japanese analysts said it was a significant escalation.
"This is serious ... intrusion into Japan's airspace is a very important step to erode Japan's effective control over the area," said Kazuya Sakamoto, a professor at Osaka University. "If China sends a military plane as a next step, that would really make Japan's control precarious."
Toshiyuki Shikata, a Teikyo University professor and a retired general, said the use of aircraft by both sides was significant.
"Something accidental is more likely to happen with planes than with ships," he said.
"SACRED TERRITORY"
The incident comes just days before a Japanese election that is expected to return to power the conservative Liberal Democratic Party (LDP) with hawkish former prime minister Shinzo Abe at the helm.
Abe has vowed to take a tough stance in the dispute over the islands, which are near potentially huge maritime gas reserves, and has said that the ruling Democratic Party's mishandling of its diplomacy had emboldened China.
Abe has also promised to boost spending on defence including on the coastguard.
Smaller Asian countries such as the Philippines have also become increasingly worried about Beijing's growing military assertiveness and its claims to disputed islands in the South China Sea.
U.S. President Barack Obama urged Asian leaders during a visit to the region in November to rein in tension over territorial disputes.
Washington does not take a position on the sovereignty of the islands but says they are clearly covered by a 1960 security treaty obliging the United States to come to Japan's aid if attacked.
US Assistant Secretary of State For East Asian and Pacific Affairs Kurt Campbell reiterated that on Thursday.
"We are encouraging all sides to take appropriate steps so that there will be no misunderstanding or miscalculation that could trigger an environment that would be antithetical to peace and stability," Campbell told reporters in Malaysia.
China says the islands are its "sacred territory" and says its claim predates Japan's.
Nationalization of the islands in September was intended to keep them out of the hands of a fiery nationalist politician, to head off a more damaging confrontation with China.
But the move triggered a wave of protests in China that shuttered Japanese factories and stores, disrupted trade and prompted China to strengthen its own claim to the disputed territory. Japanese carmakers saw their sales in China slump in the weeks after the islands were sold.-Reuters (December 13, 2012 6:32AM)
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