A probe inserted into reactor two at the Fukushima Daiichi nuclear plant revealed lethal doses of radiation and that the level of cooling water inside was far lower than expected.
But operator Tepco says the plant remains in a cold shutdown.
The plant was severely damaged by the March 2011 earthquake and tsunami.
Decommissioning challenge
Since the crisis began in Fukushima prefecture, the operation to contain it has been hampered, reports the BBC's Roland Buerk in Tokyo. Tsunami damage to instruments has made it impossible to know what is happening inside the reactors.
On Tuesday workers managed to insert a probe into reactor number two for only the second time and found damage worse than expected.
Radiation was up to 10 times the fatal dose, the highest yet recorded at the plant. The level of water cooling the melted-down nuclear fuel was also far lower than expected.
The other two melted-down reactors, which are yet to be examined closely, could be in an even worse state, our correspondent adds.
Tokyo Electric Power Co (Tepco) says the finding does not affect their assessment that the nuclear fuel is being safely cooled.
But it could make decommissioning harder, as special equipment will have to be designed to withstand the radiation.
The plant's supervisor told the BBC last month that he was concerned about the fragility of the cooling system.
It relies on hoses snaking around the site and pumps mounted on the back of trucks, and could be vulnerable to strong aftershocks or another tsunami.
Before the Fukushima disaster, nearly a third of Japan's electricity was generated from nuclear power.
The government has been carrying out stress tests on nuclear power stations to try to persuade people living nearby that they can resist strong earthquakes.
But local communities have been refusing to allow reactors to be restarted after routine maintenance, which has to take place every 13 months.
On Monday, Japan shut down another nuclear power station, leaving only one of the 54 nuclear reactors in operation, which is due to be switched off in May. (BBC)
