TOKYO (AFP) – Japan on Friday announced a $49 billion budget to help fund reconstruction after last month's earthquake and tsunami as Prime Minister Naoto Kan said the country was facing a "crisis within a crisis".

It was the first reconstruction budget approved by Kan's cabinet since the catastrophe in northeast Japan on March 11 that devastated entire towns and left more than 27,000 people dead or missing.

The government also said it planned to widen the evacuation zone around the Fukushima atomic plant, which has been leaking radiation since it was hammered by the magnitude 9.0 quake and tsunami in the country's worst post-war disaster.

"This crisis is not just one crisis. This is a crisis within a crisis," Kan told a news conference.

"Our country has been faced with a lot of issues for the past 20 years. Economic growth has been in the doldrums. The number of suicides has not declined" and stayed above 30,000 annually for years, he said.

"We have been experiencing a crisis. Then the crisis of the great disaster and the nuclear power accident came. We regard this crisis as happening within a crisis. And we are required to resolve the two crises at the same time," he said, adding it was "a kind of destiny" to serve at such a time.

The four trillion yen ($49 billion) extra budget would cover restoration work such as clearing massive amounts of rubble and building temporary housing for the thousands of people who lost their homes.

Kan said the government hoped to finish building 30,000 temporary housing units by the end of May and eventually provide accommodation for 100,000 households.

Nearly 131,000 people are still living in emergency shelters while many others are staying with relatives and friends.

More than 85,000 of the homeless have fled houses near the stricken Fukushima nuclear plant.

The government said Friday the evacuation zone would be extended to areas beyond the 20-kilometre (12-mile) no-go zone around the plant where radiation levels have been rising.

Embattled plant operator Tokyo Electric Power Company (TEPCO) has said it aims to cool reactors and start reducing radiation from the facility within three months and expects to achieve cold shutdown within six to nine months.

Families forced to flee their homes angrily shouted at the TEPCO head Masataka Shimizu Friday as he apologised for the disaster.

"When can we go home?" one emotional evacuee demanded as Shimizu bowed deeply in apology during a visit to dozens of people living in an evacuation centre shown on the TV Asahi network.

The 20-kilometre no-go zone around the plant came into effect Friday, with police erecting checkpoints to prevent people returning to their homes within the high-radiation area. There is a wider 30-kilometre zone where people have been encouraged to leave.

The ban can be enforced with detentions or 100,000 yen ($1,200) fines but one member from each household will be allowed to make a short authorised and monitored trip into the zone to collect personal belongings.

Japan has said the cost of rebuilding could be as much as 25 trillion yen while the area close to the Fukushima plant may be uninhabitable for years as a result of the world's worst nuclear disaster since Chernobyl in 1986.

Kan's cabinet plans to submit the supplementary budget to parliament on April 28, aiming to pass it by May 2 with the expected support of the conservative opposition, which controls the upper house.

The government will not issue fresh bonds but plans to divert some funds originally aimed at supporting the pension programme and child allowances and slash plans to cancel highway tolls.

Kan, under pressure to reduce the nation's huge debt, however said a "sizeable" second extra budget would be necessary which would be financed by a government bond issue.