TOKYO, JAPAN Feb 24 - Japan has verified the existence of a 1969 agreement with the United States that would allow Washington to deploy nuclear weapons in southern Japan in the event of an emergency, the Nikkei business daily reported on Wednesday.

The agreement could put Japan's government in a bind by forcing it to choose between scrapping the pact with its top security ally and watering down its self-imposed ban against the possession, production or import of nuclear arms.

The pact allows the United States, after discussions with Japan, to deploy nuclear weapons on the southern island of Okinawa where the bulk of U.S. bases in Japan are located, the Nikkei said.

Foreign ministry officials were not immediately available for comment.

The newspaper quoted a draft of a report expected next month by a government panel of academics looking into diplomatic agreements suspected to have been kept under wraps by previous Japanese governments.

The investigation was launched after Prime Minister Yukio Hatoyama's Democratic Party took power last August, ending decades of conservative rule with pledges to make policies more transparent.

An analyst said Hatoyama could choose to annul the 1969 agreement, but debate over a nuclear deterrent would likely be an issue as Japan and United States discuss ways to review their alliance this year.

"Before talks on deepening the alliance, the U.S. will want to see Japan set a clearer picture on where it stands on issues ... such as its three non-nuclear principles," said Katsuhiko Nakamura, director of research at think tank Asian Forum Japan.

"Only when they've resolved these fuzzy issues can they go ahead with issues like how to work together in global affairs, which Hatoyama has talked about."

Japan often refers to itself as the only country to have suffered nuclear attacks when touting its non-nuclear principles.

But Tokyo also benefits from the shelter of the U.S. nuclear umbrella, and many in Japan would be reluctant to see the United States' nuclear deterrent significantly weakened in the face of a resurgent China and threats from North Korea.

The government panel has failed to confirm a separate agreement suspected of allowing stopovers by U.S. military aircraft or vessels carrying nuclear weapons, the Nikkei said, although former officials have commented on its existence.