The Japanese government plans to form a new nuclear safety agency under the Environment Ministry in order to separate its regulatory functions from the Ministry of Economy, Trade and Industry (METI), according to the Nikkei business daily.

Goshi Hosono, the state minister in charge of the nuclear crisis, will release a draft plan on Friday, proposing the merger of METI's nuclear and industrial safety agency with the cabinet office's nuclear safety commission, the daily said.

Prime Minister Naoto Kan has been a leading advocate of nuclear industry oversight, citing the inadequate handling by METI and the safety agency of the crisis at Tokyo Electric Power Company's Fukushima Daiichi power plant, the business newspaper said.

The new agency, which would be placed under the environment minister's watch, would also take over radiation-monitoring operations from the science and technology ministry, the paper reported.

The business daily added that the agency's other duties would include overseeing the removal of radioactive substances from contaminated soil and offering health management services to residents near nuclear power plants.

The government and the ruling Democratic Party of Japan will discuss the plan with a goal to launch the agency next April, the Nikkei said.