"The national security environment that Japan faces has become more serious," the ministry's interim report said, The Asahi Shimbun reported.
Japan and China currently are locked in a bitter territorial dispute over the Senkaku Islands, a group of uninhabited islets under Japanese control that are also claimed by China. There have been a number of incidents involving Chinese surveillance boats in the islands' waters that Japan have strongly protested.
Aside from China's growing military might, Japan is also deeply concerned about North Korea's nuclear threats. The North already has conducted three nuclear tests.
"In order to respond to attacks against outlying islands, it will be indispensable to maintain advantages in both air and sea capabilities," the Japanese Defense Ministry said, adding a Marine-like unit capable of amphibious landings would be one way to quickly respond to attacks on the outlying islands.
Kyodo News said the ministry's guidelines called for acquiring the capability to attack enemy bases, strengthening the marine functions of the Self-Defense Forces and improving surveillance over a wide area covering remote islands.
The Asahi said the new guidelines being compiled by the ministry would be completed by the end of the year under the new government of Prime Minister Shinzo Abe, who has called for strengthening Japan's alliance with the United States.
With this week's landslide win in the upper house elections, which gives Abe's government control of both chambers of Parliament, there have been reports the administration would be able to look into revising the country's pacifist constitution.
The China Daily, citing Japanese media, said the Defense Ministry is also considering deploying unmanned surveillance drones to protect the remote islands.
The daily quoted Chinese observers as saying Japan has been expanding its military forces rapidly over the years "to counter what it claims is an increasing threat from China."
"Japan has fostered strong maritime forces in Asia and it is now upgrading its air force," Su Hao, a professor of Asia-Pacific studies at China Foreign Affairs University, told China Daily. The professor said Japan is cooperating with the U.S. military as Washington shifts its strategic focus to the Asia-Pacific region.
The report also quoted a Chinese Defense Ministry spokesman as saying Beijing is aware of Japan's military buildup and will monitor further developments.
The Wall Street Journal, in an earlier report this week, quoted Japanese Defense Minister Itsunori Onodera as saying in an interview the security environment Japan faces is shifting constantly.
"Our requirements for equipment and our goals change accordingly. That's why we are revising the defense guidelines," he told the Journal.