The incident at Japan's Fukushimi 1 nuclear plant now rates six on a scale of seriousness - with seven being the highest, according to France's nuclear safety authority
The explosion at a nuclear power plant in Chernobyl, Ukraine in 1986 was rated a seven.
A third explosion and fire at the plant caused the release of radiation into the atmosphere earlier on Tuesday.
The country's prime minister Naoto Kan said radiation levels on the east coast had "risen considerably".
People living less than 12 miles (20km) from the complex, which is 155 miles (250km) north of Tokyo, have been told to leave the area.
Tens of thousands of residents have already been evacuated from the zone.
Chief cabinet secretary Yukio Edano told a news conference that the levels were high enough to damage people's health.
Those living within a 12 miles to 18km radius of the plant are being urged to stay indoors.
Mr Edano said: "Please do not go outside. Please stay indoors. Please close windows and make your homes airtight. Don't turn on ventilators. Please hang your laundry indoors."
A government official said radiation levels later dropped.
The Fukushima plant is in one of the provinces hit hardest by the 9.0 magnitude earthquake and subsequent tsunami on Friday and, after hydrogen explosions on Saturday and Monday, the problems have now spread to four out of the six reactors.
Mr Kan said: "The level seems very high, and there is still a very high risk of more radiation coming out."
All non-essential workers have been evacuated from the damaged facility but around 50 others are attempting to cool the reactors down by injecting water.
The metropolitan government has said higher than normal radiation levels have been detected in Tokyo but not enough to harm human health.
The head of the International Atomic Energy Agency (IAEA) said the Japanese government has asked the agency for help and the US confirmed experts were being sent to the plants 150 miles north of Tokyo.
The IAEA said Japanese authorities had told them that radioactivity was being released "directly" into the atmosphere after the latest incident.
"The Japanese authorities are saying that there is a possibility that the fire was caused by a hydrogen explosion," it said.