By Chris Meyers and Kim Kyung-hoon
SENDAI, Japan (Reuters) - Japan faced the threat of new radiation leaks at an earthquake-crippled nuclear plant on Sunday after the cooling system failed at a second reactor in what could be the world's worst nuclear disaster in 25 years.
Strong aftershocks continued to shake Japan's main island as the desperate search pressed on for survivors from Friday's massive earthquake and tsunami. The death toll was expected to rise above 2,000.
Thousands were evacuated on Saturday following an explosion and leak from the facility's No. 1 reactor in Fukushima, 240 km (150 miles) north of Tokyo, where there is believed to have been a partial meltdown of the fuel rods.
Now engineers were pumping in seawater, trying to prevent the same thing from happening at the No. 3 reactor, the government said in apparent acknowledgement that it had moved too slowly on Saturday.
"Unlike the No.1 reactor, we ventilated and injected water at an early stage," Chief Cabinet Secretary Yukio Edano told a news briefing.
Asked if fuel rods were partially melting in the No. 1 reactor, Edano said: "There is that possibility. We cannot confirm this because it is in the reactor. But we are dealing with it under that assumption. We are also dealing with the No.3 reactor based on the assumption that it is a possibility."
Nuclear plant operator Tokyo Electric Power (TEPCO) said radiation levels around the Fukushima Daiichi plant had risen above the safety limit but that it did not mean an "immediate threat" to human health.
It said earlier it was preparing to vent steam to relieve pressure in the No.3 reactor at the plant and the government had warned of a rise in radiation during the procedure.
One anti-nuclear energy NGO in Japan said the disaster should have been foreseen.
"A nuclear disaster which the promoters of nuclear power in Japan said wouldn't happen is in progress," the Citizens' Nuclear Information Center said. "It is occurring as a result of an earthquake that they said would not happen."
Thousands spent another freezing night huddled in blankets over heaters in emergency shelters along the northeastern coast, a scene of devastation after the 8.9 magnitude quake sent a 10-meter (33-foot) wave surging through towns and cities in the Miyagi region, including its main coastal city of Sendai.
In one of the heavily hit areas, Rikuzentakata, a city close to the coast, more than 1,000 people took refuge in a school high on a hill. Some were talking with friends and family around a stove. The radio was giving updates. On the walls were posters where names of survivors at the shelter were listed.
Some were standing in front of the lists, weeping.
Kyodo news agency, which said the number of dead or unaccounted was expected to exceed 2,000, reported that there had been no contact with around 10,000 people in one town, more than half its population.
Japan's nuclear safety agency said the number of people exposed to radiation could reach 160. Workers in protective clothing were scanning people arriving at evacuation centers for radioactive exposure.
"They are working on relieving pressure and pumping in water into the No. 3 reactor," Edano said.
"This will result in some radiation leakage, although at a level that won't affect peoples' health. It will help stabilize the situation." He also said radiation from the No. 1 reactor was "low enough not to affect people's health".
The crisis has triggered anti-nuclear power protests in Europe. Up to 60,000 protesters formed a 45-km (27-mile) human chain in Germany to denounce the government's policy of extending the life of nuclear plants.
Officials in Japan ordered the evacuation of a 20-km (12-mile) radius zone around the plant and 10 km (6 miles) around another nuclear facility close by.
Around 140,000 people had left the area, while authorities prepared to distribute iodine to protect people from radioactive exposure.
"There is radiation leaking out, and since the possibility (of being exposed) is high, it's quite scary," said Masanori Ono, 17, standing in line on Saturday to be scanned for radiation at an evacuation center in Fukushima prefecture.
The wind over the plant would continue blowing from the south, which could affect residents north of the facility, an official at Japan's Meteorological Agency said.
"The use of seawater means they have run out of options. If they had any other water they would have used it. It likely means the power for their pumps is gone," said David Lochbaum, director of the Union of Concerned Scientists Nuclear Safety Project.
The government, in power less than two years and which had already been struggling to push policy through a deeply divided parliament, came under criticism for its handling of the crisis.
"Crisis management is incoherent," blared a headline in the Asahi newspaper, charging that information disclosure and instructions to expand the evacuation area around the troubled plant were too slow.
"Every time they repeated 'stay calm' without giving concrete data, anxiety increased," it quoted an unidentified veteran party lawmaker as saying.
There have been proposal of an extra budget to help pay for huge cost of recovery but the government says there is also a 200 billion yen ($2.4 billion) budget reserve for the current fiscal year which can be used.
The Bank of Japan is expected to pledge on Monday to supply as much money as needed to prevent the disaster from destabilizing markets and its banking system. It is also expected to signal its readiness to ease monetary policy further if the damage from the worst quake since records began 140 years ago threatens a fragile economic recovery.
Before news of the problem with reactor No. 3, the U.N. nuclear safety agency said the plant accident was less serious than both the Three Mile Island accident in 1979 and Chernobyl in 1986.
An official at the agency said it rated the incident a 4 according to the International Nuclear and Radiological Event Scale (INES). Three Mile Island was rated 5 while Chernobyl was rated 7 on the 1 to 7 scale.
Along the northeast coast, rescue workers searched through the rubble of destroyed buildings, cars and boats, looking for survivors in hardest-hit areas such as Sendai, 300 km (180 miles) northeast of Tokyo.
Aerial footage showed buildings, trains and even light aircraft strewn like children's toys after powerful walls of seawater swamped areas around Sendai.
Kyodo said about 300,000 people were evacuated nationwide, many seeking refuge in shelters, wrapped in blankets, some clutching each other sobbing.
It said 5.5 million people were without power, while 20,800 buildings had been destroyed or damaged. Four trains were unaccounted for after the tsunami.
Plant operator TEPCO has had a rocky past in an industry plagued by scandal. In 2002, the president of the country's largest power utility was forced to resign along with four other senior executives, taking responsibility for suspected falsification of nuclear plant safety records.
Many Japanese flooded social networking sites with worries about the plant.
"I can't trust TEPCO," said a person with the handlename Tanuki Atsushi on mixi, the Japanese social networking site.
The disaster struck as the world's third-largest economy had been showing signs of reviving from an economic contraction in the final quarter of last year. It raised the prospect of major disruptions for many key businesses and a massive repair bill running into tens of billions of dollars.
Foreign countries have started to send disaster relief teams to help Japan, with the United Nations sending a group to help coordinate work.
The earthquake was the fifth most powerful to hit the world in the past century. It surpassed the Great Kanto quake of September 1, 1923, which had a magnitude of 7.9 and killed more than 140,000 people in the Tokyo area.
(Additional reporting by Risa Maeda in Tokyo and Yoko Kubota in Rikuzentakata; Writing by Nick Macfie, editing by Jonathan Thatcher)