The drill, set to last for 12-days and dubbed "Keen Sword", is aimed at improving military preparedness near remote islands, Defense Ministry sources said.

The drills, which are not open to the media, were originally supposed to include on Monday an exercise in which the joint forces reclaim a remote island off Okinawa that has been captured by enemy forces, according to local media sources.

The sources said however that the drill, which was supposed to be based on and around the uninhabited island of Irisunajima today, had been called off to avoid further aggravating already soured ties with neighboring China.

Japan and China are currently involved in a bitter dispute concerning Japan's illegal attempts to "nationalize" some of the Diaoyu Islands in the East China Sea.

While controlled by Japan, China maintains the islands in questions are inherently Chinese territory and has staunchly rejected claims by Japan to the islands and its moves towards nationalization by the Japanese central government.

Chinese vessels have been patrolling the waters around the islands for the past 17-days, according to sources with knowledge of the matter.

Due to the timing, massive scope and proximity to the disputed islands, observers say that the Keen Sword drills have the potential to exacerbate an already incendiary situation between Japan and China, although some pundits are quick to point out that a similar joint drill was held between the U.S. and Japan in 2010 and the U.S. military routinely holds joint exercises with Asia- Pacific nations.