UN nuclear experts on Wednesday praised Japan for making progress on shutting down the crippled Fukushima plant, but warned the situation there remained "very complex".

And the panel from the International Atomic Energy Agency backed up earlier assessments that processed water now kept at the site would probably have to be dumped in the ocean.

"The team considers that since our previous mission in April this year, Japan has achieved good progress in improving its strategy and in allocating necessary resources to conduct a safe decommissioning of the Fukushima Dai-ichi nuclear power station," team leader Juan Carlos Lentijo told reporters as he delivered the interim report.

"The team considers that the situation remains very complex and that there are still very challenging issues that must be solved for the plant's long-term stability," he said.

The 19-strong IAEA mission has been in Japan since last week to examine efforts by Tokyo Electric Power (TEPCO) to contain the site, where reactors were sent into meltdown by a huge tsunami that crashed ashore in March 2011.

Their review included looking at the management of contaminated water that has been used to cool reactor cores, as well as work on removing fuel assemblies from the spent fuel pool in Reactor No.4.

"Regarding the growing amounts of contaminated water at the site, TEPCO should... examine all options for its further management, including the possibility of resuming controlled discharges (into the sea) in compliance with authorised limits," an IAEA statement said.

"To pursue this option, TEPCO should prepare appropriate safety and environmental impact assessments."

The roadmap towards the decommissioning of the Fukushima plant envisages a process that is likely to last three or four decades.

Last month TEPCO began removing fuel rods from a storage pool -- the trickiest process since the runaway reactor cores were brought under control at the end of 2011.

Disposing of the thousands of tonnes of water which was used to cool reactors or polluted by other radioactive material is a major headache. At present huge storage tanks are being used but there is no permanent solution.

Most experts agree that it will eventually have to be released into the ocean after being scoured of its most harmful contaminants, but local fishermen, neighbouring countries and environmental groups all oppose the idea.

The IAEA team will produce their final report on their inspection by the end of January.