WSJ’s Yumiko Ono reports on fears surrounding the Japanese’s government’s decision to dump more than 11,000 tons of radioactive water into the Pacific Ocean.

Earthquake in Japan

See all the graphics on the situation in Japan — from before and after photos to the status of the reactors to survivors’ stories.

Japanese authorities said Tuesday they had discovered for the first time fish swimming off the country’s Pacific coast carrying high levels of radioactive materials. The finding, the latest blow from the nuclear crisis, is stoking concerns about environmental damage to local marine life, the safety of the nation’s food supply, and the viability of Japan’s iconic seafood industry, which was already struggling following the tsunami.

The two separate samples of tiny fish were caught before Tokyo Electric Power Co., the operator of the crippled Fukushima Daiichi reactors, began the process Monday night of dumping 11,500 tons of contaminated water into the sea, raising fears that the problem could spread significantly in coming days. Tepco has said that, before the authorized unloading of water, there was an uncontrolled leak of an uncertain quantity of highly radioactive water from the reactors into the sea.

Efforts to end the release of more highly radioactive water at the Fukushima Daiichi plant finally met with some success Tuesday, Tepco said, as the injection of what it called “liquid glass” gel around a damaged pipe managed to reduce the toxic flow by half. Workers poured 3,000 liters, or 780 gallons, of gel-like sodium silicate onto the rocks supporting the pipe. Authorities said the substance would continue to harden over time and could continue to slow the flow of water.

Workers have tried a variety of methods to reduce the flow since it was discovered Saturday. The water is thought to be from the highly damaged No. 2 reactor. A water sample taken just outside the water intake for the No. 2 unit showed the level of radioactive iodine-131 at 7.5 million times the allowable limit, the most dangerous level of radiation so far detected.

Separately, South Korea said Tuesday it would seek more information from Japan’s Foreign Ministry about the decision to allow Tepco to dump the 11,500 tons of low-level radioactive water into the ocean. The water is being discharged to free up storage space for much more toxic water. “We regret having caused concern to other countries because of the discharge of the radioactive water,” said Hidehiko Nishiyama, deputy director general of the Nuclear and Industrial Safety Agency, the industry regulator. “We will try to avoid further dumping of contaminated water as much as possible.”

Officials from Tepco and the agency have said repeatedly that the level of radiation that has seeped into the sea over the past two weeks—while measured at highly elevated levels right near the plant—posed no major immediate threat to humans or to the environment, because the water disperses quickly into the vast ocean. But the contaminated fish were caught about 80 kilometers south of the reactors, well beyond the 20-kilometer evacuation perimeter.

One sample of konago—or young lance fish—caught Friday contained twice the permissible level of radioactive iodine, which has a half-life of eight days and which can accumulate in the thyroid in humans, possibly raising the risk of thyroid cancer. The other konago sample, caught Monday, had just over the permissible limit for cesium, an element with an uncertain impact on human health but with a half-life of 30 years.

While the local government near the location where the fish were caught said it would suspend fishing of the particular species contaminated, national government officials said no broader fishing ban was contemplated. “It will be necessary to monitor various parts of the sea, and also to consult marine ecology experts,” said Chief Cabinet Secretary Yukio Edano at a news conference Tuesday.

The reports of contaminated fish have followed reports of tainted produce including spinach and broccoli, as well as raw milk, in Fukushima prefecture and other areas close to the reactors. The reports of contaminated seafood are potentially more worrisome, because the contaminated seawater, and the fish, move in uncontrollable and untraceable paths.

It isn’t clear how extensively the contamination will spread, but fears of radioactive Japanese fish, both at home and abroad, threaten to further hurt an industry already weakened by the tsunami, which wiped out a number of fishing villages along Japan’s northeastern coast. Even as the country has industrialized, the fishing industry has remained integral to its image, with a fishing community dotting Japan’s shores every 5.6 kilometers, according to a 2009 agriculture ministry white paper. Just under half of Japan’s roughly $3 billion in annual food exports comes from seafood in raw or processed forms.

On Tuesday, India suspended food imports from Japan for three months, fearing radioactive contamination, an Indian government statement said. The ban could be extended.

India imports only a few million dollars in food from Japan annually, and earlier had intensified its screening of items purchased from Japan. Also Tuesday, the European Union said it will further reinforce radiation controls on imports of food and animal feed from Japan, according to Reuters.

“This too?” Hiro Onodera said Tuesday, discussing the official dumping of contaminated water, as he shoveled mud out of his wholesale fish shop across from the once-thriving fish market of Kesennuma, a port town known for its abundance of bonito, mackerel pike and tuna. The market, devastated by the tsunami, is seeking to reopen in June. “Japanese people are very sensitive about food safety so I worry that this could be another hurdle that we’d have to clear,” the 56-year-old Mr. Onodera said.

“What we’re concerned about is damage from misinformation,” said Hiroshi Somekawa, deputy secretary of the fisheries division of Kesennuma’s industrial department. “While we’re trying so hard to rebuild this industry, it’s not desirable that people may start to turn away from fish or refuse to eat it altogether.”

There are already signs that such attitudes are spreading. Australian seafood producer Clean Seas Tuna Ltd. is seeing increased demand from overseas for its farmed yellowtail kingfish following the Japanese nuclear crisis, Managing Director Clifford Ashby said Tuesday. “The increased demand is coming mainly from Southeast Asian countries that normally take Japanese product, and from the U.S.,” he added.

Nani Abdul Manap, a deputy manager at the Japanese-owned Isetan department story in Kuala Lumpur, Malaysia, said she is certain Japanese fish now on sale there “are safe because we brought them in before the tsunami.” But Ms. Nani said “once it runs out, we will source from neighboring countries. And if the suppliers there cannot supply us, then we won’t sell that item. We don’t think we will take fish and crabs from Japan because of the radiation there.”

The contaminated konago were both found in Ibaraki prefecture, just south of Fukushima, home to the leaking nuclear plant. No fishing is currently being done in Fukushima. The radioactive material was found in the fish after Ibaraki had decided to resume fishing after the tsunami. All ports aiming to restart fishing now will be required to test for radioactive contamination before resuming.

Ibaraki’s fishery department said konago tend to swim in shallow waters close to the coast, and usually come to Ibaraki from northern areas. It is possible that the sampled fish passed through the waters near the nuclear plant before arriving in northern Ibaraki, officials said. Local fishery cooperatives also tested 10 other kinds of fish, but none of those samples exceeded safety limits, prefecture officials said. Only fishing for konago will be suspended in Ibaraki. A bowl of the tiny konago is typically served as a heavily flavored side dish.

The fears of contaminated fish come after the tsunami had crimped Japan’s fishing industry. An April 1 United Nations report said 18,500 fishing vessels had been damaged or lost in northern Japan; in some areas, more than 90% of the industry was wiped out. “The damage to fishing ports has also been severe,” the report said. “Considering that agriculture and fisheries are one of the biggest industries in Tohoku Region,Reconstruction of these sectors …will be critical for the reconstruction of livelihoods.”

Japan’s overall production totaled 5.3 million tons of fish in 2009, according to the Japan Fisheries Agency. The coveted catch in the waters along the Tohoku coastline accounted for about 25% of the total, before the natural disaster hit. Fukushima prefecture produced the largest part of that, 830,000 tons. Iwate prefecture, known for its rich salmon supply, produced 190,000 tons and Miyagi prefecture—where Kesennuma is located—360,000 tons.

A Fisheries Agency spokesman said some fisheries in Iwate, 200 kilometers north of the troubled nuclear-power plant, will resume business as early as next week. The prefectures will check the water for radioactive contamination before giving the go-ahead.

Concern over radioactively contaminated marine products casts a further pall over Japan’s struggling fishing industry. The industry produced 1.47 trillion yen, or $17.44 billion, of fish in 2009, a 9.5% decrease from the previous year. Fish consumption in Japan has dropped off in recent years as diet habits Westernized, demographics shifted and households economized.

For coastal fishing cities like Kesennuma, the fish market is the heart of the local economy. Not only does the seafood industry provide jobs directly, it also provides much of the town’s other employment—from fuel companies that fill up the boats to restaurants that cater to tourists who come to see the market in action. But nearly everything along Kesennuma’s waterfront was swallowed by the rushing waters.

Even if the town is able to clean up, larger structural problems must be resolved. In the aftermath of the tsunami, the shoreline is 75 centimeters lower, town officials said. As a result, during high tide, water laps onto the floor of the fish market, making it unsuitable for selling food. The southern tip of the market is still under water.

“This is Kesennuma’s mainstay business and most of the businesses have been crushed, so the impact will be significant on the local economy,” said Mr. Somekawa of the local fisheries division.

—Mitsuru Obe in Tokyo, Celine Fernandez in Kuala Lumpur and Ray Brindal in Canberra, Australia, contributed to this article. Write to Juro Osawa at juro.osawa@dowjones.com