A spokesman for Japan's Nuclear Regulatory Authority said the decision to give the leak a level 3 classification follows a discussion with the Vienna-based International Atomic Energy Agency, CNN reported.
Previously, the leak was assigned a level 1 or "anomaly rating" on the International Nuclear and Radiological Event Scale.
The scale ranges from zero for no safety threat to seven for major incidents like the meltdown the plant suffered as a result of the March 2011 earthquake and tsunami.
The decision to raise the alert level came two days after a Japanese government minister compared efforts by the plant's operator to deal with toxic leaks to a game of "whack-a-mole."
The leakage of some 300 tons of highly radioactive water from a surface tank at the plant went unnoticed for more than a month before it was discovered on Aug. 19, Japan's The Asahi Shimbun reported.
The leak was found due to a spike in the beta-ray exposure levels of plant workers.