The prime minister faced angry protests during a visit to Okinawa from residents who had hoped to see the US Marine Corps' Futenma Air Station moved off the southern island.
Hatoyama met with the Okinawa governor and apologized for breaking his election promise to relocate the base.
"I apologize to people in Okinawa as I could not keep to my word that I'll relocate the base off the prefecture," Hatoyama said in a meeting with Okinawa governor Hirokazu Nakaima shown on television.
The island hosts the majority of the US troops and military bases in Japan.
"After holding a number of talks within Japan and with the United States, I reached the conclusion that I have to ask Okinawans about relocating the Futenma base within Okinawa - specifically speaking, to the Henoko district," in a quiet coastal area of the island, Hatoyama told Nakaima.
A grim-faced governor replied: "I cannot help but say that the plan of relocating to Henoko is very regrettable and very difficult."
Hundreds of people protested outside the prefecture building, holding banners saying "We are angry" and some chanting "Hatoyama go home!"
Japanese and US negotiators had agreed that the base would be relocated on Okinawa rather than moved elsewhere, in line with an agreement by previous conservative governments in Tokyo and Washington, reports said Sunday.
Hatoyama met with his ministers and confirmed the agreement before his visit to Okinawa, they said.
Relations with the United States have been strained since the center-left premier took power last September after a landslide poll victory, pledging to move the base off Okinawa, scrapping a 2006 deal between the previous conservative government and Washington.
The administration of US President Barack Obama has urged Hatoyama to stick with the original pact, arguing a strong US military presence is crucial for the defense of Japan and stability in the wider Asia-Pacific region.
As the search for an alternative site in Japan has proved fruitless, Hatoyama this month backtracked on his pledge to move the base off the island, instead sticking with the 2006 pact agreed with Washington to relocate it within Okinawa.
Hatoyama told the Okinawa governor "as the prime minister, I have to say that I can't allow the deterrent power of the US forces in Japan, including the Marine Corps, to decline, given that the security environment in East Asia remains fragile."
Last month, nearly 100,000 protesters attended a rally on Okinawa to demonstrate against a US air base.
And last Sunday, thousands of people formed a human chain surrounding the Futenma air base to demand the closure of the unpopular facility because of noise from the facility and friction with the US forces.
Agence France-Presse
(China Daily 05/24/2010 page12)