Hatoyama, who was elected last year promising a less subservient relationship with Washington, has been reviewing a 2006 pact to relocate the Futenma airbase within Okinawa prefecture and suggested in the past it may be moved off the island instead.
Japan PM hints at leaving disputed US base on Okinawa
But Hatoyama told reporters Friday that "it is difficult to move it from the prefecture". He immediately added: "But we want to cherish what Okinawa people hope for. I'm working hard on that situation."
Local media reported Hatoyama was preparing an alternative option.
Japan's prime minister, who has promised a final decision by May, said his government would decide by the end of March on a basic relocation plan.
Washington says the base is vital to defending Japan, which relies heavily on the United States for regional security and is home to some 47,000 US troops, of which more than half are based on Okinawa.
"Peace and stability in the region depend in no small part on the enduring presence of forward deployed US forces in Japan," Michael Schiffer, a senior Pentagon official, told Congress on Wednesday.
If implemented, the 2006 pact between the two countries would move the base from a crowded residential district to a quieter coastal part of the island.
Some allies of Hatoyama's ruling coalition want it to be moved off Okinawa or even outside Japan, citing local complaints about the heavy American military presence.
Japan's defence minister plans to visit Okinawa next week to meet the local governor to discuss the relocation of the base.
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