A Japanese Self-Defence Force ship and a leisure fishing boat collided off the coast of Hiroshima in western Japan, leaving two of the fishing boat's crew in critical condition, the country's defence minister said.

The fishing boat, with four crew, capsized after the collision with the vessel "Osumi" at around 8 a.m.  The cause of the collision is still being investigated, the Japanese Coast Guard said.

"This accident is very regrettable," Defence Minister Itsunori Onodera told an emergency news conference after the accident, pledging full cooperation and help with the probe.

The accident comes as Prime Minister Shinzo Abe boosts military spending to counter a more militarily assertive China, with ships from the two countries shadowing each other around a group of East China Sea islets claimed by both.

Japan calls the islands the Senkaku and China calls them the Diaoyu.

The accident occurred in the Seto Inland Sea to the east of Atatajima, a small island off the coast of Hiroshima city, the Coast Guard said, adding that the remaining two crew of the fishing boat were conscious and their lives were not in danger.