An explosion at Japan's stricken Fukushima Dai-ichi nuclear power plant has caused further damage to the Unit 2 reactor, while a fire has broken out at Unit 4, worsening an already harrowing crisis and forcing emergency workers to leave the site.

Radiation levels around the plant Tuesday were measured at 8,217 microsieverts an hour -- more than 7,000 above the legal limit. Anyone less than 20 kilometres of the reactors was urged to leave the area, while anyone within 20 to 30 km was told to stay inside.

A blast was heard at the Unit 2 reactor at the plant at 6:14 a.m. local time, officials with the plant's operator, the Tokyo Electric Power Co., told a news conference on Tuesday.

That was followed by a fire at the Unit 4 reactor, which had escaped the same level of critical damage suffered by the other three reactors at the plant. Reports said the fire was later extinguished. 

The Unit 2 explosion is the third to hit the plant since last Friday's 9.0-magnitude earthquake. The Dai-ichi complex sits just off the Pacific coast and was badly hammered by the subsequent tsunami.

The blast was heard near the suppression pool in the reactor's containment vessel, which is the last line of defence before radiation is released into the outside air, the TEPCO representatives said.

Company officials told reporters that pressure had fallen in the suppression pool, indicating that it had sustained some damage in the blast.

Engineers have been pumping sea water into the reactors in an effort to keep them cool after the normal cooling systems were knocked out when the quake cut power to the plant.

An official with the Nuclear and Industrial Safety Agency told reporters Tuesday that in the overnight hours, water levels dropped dramatically in the No 2 reactor, leaving the upper parts of the white-hot nuclear fuel rods exposed. A valve that keeps pressure in the suppression pool down had also partially closed.

The official said water levels have since started to recover.

TEPCO officials also said radiation level readings around the reactor had gone up after the blast, and so all non-essential staff had been evacuated from the area. Broadcaster NHK reported Tuesday that officials measured radiation levels three times greater than what the average person would be exposed to in one year.

But the Nuclear and Industrial Safety Agency official said that while radiation levels had spiked, they quickly fell, meaning there was likely little threat to human health.

The latest bad news from the plant came shortly after Japanese Prime Minister Naoto Kan announced a new response headquarters to help the plant's operator manage the ongoing crisis.

Kan told reporters early Tuesday that he will direct operations at the headquarters, which will be a joint venture with TEPCO.

Engineers at the plant have been struggling to keep the nuclear fuel rods inside all three of the most troubled reactors cool, and officials said Tuesday they can't deny the possibility that the fuel rods are in fact melting.

On Monday, the level of coolant water dropped precipitously inside the Unit 3 reactor, leaving the uranium fuel rods completely exposed just hours after it was rocked by a hydrogen explosion.

The explosion sent a towering cloud of smoke into the air and injured 11 workers.

A similar hydrogen blast occurred Saturday at the Unit 1 reactor, injuring four people.

Plant workers' efforts to pump in sea water will make the reactors forever unusable. Officials said Tuesday those efforts will continue.

Normally, the series of metal rods containing pellets of uranium fuel inside a nuclear reactor's core are kept cool with purified water that is pumped between the pipes. The resulting steam then drives an electricity-generating turbine, and the heat is then removed by coolant pumps.

But those pumps at the Fukushima plant, as well as back-up power supply, were knocked out by Friday's earthquake and tsunami.

A partial meltdown may be occurring inside the Unit 2 reactor itself, which is fuelling concerns for the worst-case scenario: the reactor's uranium core eats through its steel-reinforced containment vessel, resulting in a massive leak of dangerous levels of radiation.

Experts say crisis is ‘uncharted territory'

The series of accidents that have followed the worst nuclear crisis since the 1986 Chernobyl disaster in Ukraine sparked criticism that authorities were ill-prepared.

Norm Rubin, director of nuclear power research at Energy Probe, said the engineers and staff at the plant "are scrambling and doing Hail Mary passes to try to keep the fuel rods inside those reactors cool enough that they don't run dry, fail and melt."

"That's the worst case scenario at this point," he told CTV News Channel.

Rubin said as much as three-quarters of the 3.7-metre high bundles of nuclear fuel rods were completely exposed when the coolant leaked away, allowing them to heat to almost unimaginable temperatures.

"That's a serious no-no, because unless this material is cooled it is generating enough heat … an amazing amount of heat," he said. "And if you don't take that heat away the stuff that's producing the heat overheats: it just keeps getting hotter."

He added: "Something has to take this heat away or else things go very badly …

Rubin said that this is the first time so many reactors in one place have threatened to melt down at the same time, adding another layer of danger to the equation.

"This is uncharted territory … we've never been in a situation where more than one reactor is in crisis at the same time at the same facility. This is new."

Rubin said the Dai-ichi plant is almost 40 years old and had only been designed to withstand a quake of 6.5 magnitude.

"In hindsight, a few days after an 8.9 earthquake, that really seems like cutting corners … it seems nuts."

Yukiya Amano, the head of the UN nuclear watchdog and a veteran Japanese diplomat, said Japan has now responded to the International Atomic Energy Agency's offer to assist with the crippled nuclear plants and said his staff are working "around the clock" to help.

"Japan and all our member states can be assured that all resources put at our disposal are fully mobilised. That will remain the case until this crisis has been resolved."

If there is a partial or total meltdown, it could become impossible to remove the fuel. That's what happened in 1979 at Three Mile Island, which remains sealed off to this day.

Japanese officials have evacuated 180,000 people from the around the Dai-ishi plant in recent days. It is believed that as many as 190 people may have been exposed to elevated radiation levels.

CTV's Lisa LaFlamme reported from Japan early Tuesday local time that in addition to the evacuations, other residents in nearby communities have been instructed to remain indoors, despite assurances that levels of leaked radiation were low.

"The latest is that the authorities are suggesting that the radiation that leaked from that second explosion was at such a low level, they say within legal limits," LaFlamme told CTV's Power Play. "But for anybody living within breathing distance that's small comfort."

Dan Ayotte, a Canadian employee at the plant who has since returned home to Ontario, was in an office just outside the plant when the earthquake struck on Friday.

"We had filing cabinets falling down and the building was moaning and groaning," Ayotte told News Channel. "And the earthquake, you wouldn't believe the noise it makes. It's like a freight train, it just rumbles."

Ayotte and his colleagues were tested for radiation exposure, but readings indicated he did not suffer exposure beyond the acceptable levels he expects with his job.

On Saturday, local fire officials evacuated the town in which Ayotte was living, just south of the plant, and so he began the journey to Tokyo and then on home to Canada.

According to Ayotte, the fact that workers are pumping seawater into the reactors means it is "just about the end of the line for as far as salvaging anything. I think they're looking at, ‘We can't save the reactor but we can save the people.'"

With files from The Associated Press