TOKYO - Japanese Prime Minister Yukio Hatoyama said on Friday there was no need to rush a decision that could stall a realignment of U.S. troops in the country, as tension grows over an issue that could fray ties with Washington.

The top U.S. military officer kept up the pressure on Tokyo, saying a swift decision on the re-positioning of a U.S. Marine air base was needed to avoid putting a troop reorganization deal at risk, undermining security in Japan and the region.

The Sankei newspaper reported Japan would tell U.S. President Barack Obama when he visits next month that it would craft a new plan by the end of the year to relocate the base on the southern island of Okinawa. But Chief Cabinet Secretary Hirofumi Hirano said there had been no such decision.

It's about how both sides avoid risks. That's what diplomacy is about, Hatoyama told reporters. There is no need to rush.

Concerns are growing about friction over the long-planned reorganization of the U.S. military presence in Japan, the first big test of ties between Washington and a new Japanese government that wants more equal relations with its closest security ally.

How Hatoyama copes with the dispute could also affect voter support for his month-old government, now riding high at about 70 percent in most polls, especially if he looks indecisive.

U.S. Defense Secretary Robert Gates this week made a blunt call for the planned realignment to be implemented and for Tokyo to decide on the issue before Obama's November 12-13 visit to Japan.

Secretary Gates said 'hopefully before President Obama visits,' but the message is really 'absolutely as soon as possible', Mike Mullen, Chairman of the U.S. Joint Chiefs of Staff, told reporters on Friday.

It's two things: first and foremost critical in the defense of Japan in a time of a growing threat and, secondly, critical to the defense of the region, he said of the realignment.

A broad deal to reorganize U.S. forces in Japan was agreed in 2006 between Washington and Japan's long-dominant conservative party, which was ousted by Hatoyama's Democratic Party of Japan (DPJ) in an August election.

Central to the deal is a plan to move the functions of the Futenma air base to a remoter part of Okinawa, while shifting 8,000 Marines from the island to the U.S. territory of Guam, partly at Japan's expense.

Japan is host to about 47,000 U.S. military personnel as part of the security alliance, which celebrates its 50th anniversary next year.

UNPRODUCTIVE FEUD

Hatoyama had said he wanted the base moved off the island, which lies 1,600 km (1,000 miles) from the Japanese mainland in the Pacific Ocean. But U.S. officials have ruled that out, saying it would undermine broader security agreements.

Many residents on Okinawa, home to a large chunk of the U.S. military in Japan, complain about crime, noise and pollution associated with the bases and say they have borne an unfair share of the burden for the security alliance.

Some analysts said the highly public pressure by Gates during a two-day trip to Tokyo this week could prove counter-productive.

Gates risks creating a situation in which either the DPJ has to back down under U.S. pressure and lose face, or the DPJ is forced to take an even stronger stand on this or some other matter for domestic political reasons, further complicating ties, Gary Schmitt of the American Enterprise Institute said in a blog entry.

The Sankei reported that the government planned to come up with a new relocation site within Okinawa, citing unidentified government sources.

Conservative Japanese analysts and media including the Sankei have criticized Hatoyama's administration for mismanaging the feud over Futenma. Others blamed miscommunication between Washington and Japan's new government.

At the end of the day this is going to be settled one way or another, and not be the end of the U.S.-Japan relationship, said Sophia University's Koichi Nakano.

Damage to U.S.-Japan ties could spell geopolitical uncertainty in a region home to a rising China and an unpredictable North Korea, eventually affecting investment flows.

But few analysts expect bilateral strains to spill over into economic ties between the world's two biggest economies, and financial markets were taking the row in their stride.

(Additional reporting by Isabel Reynolds, Linda Sieg and Elaine Lies; Editing by Paul Tait)

Japan Barack obama