* Strontium-90 is a by-product of nuclear fission
* Tepco says levels exceed legal limits
* Discovery may complicate efforts to release groundwater into ocean (Adds new nuclear safety rules finalized on Wednesday)
By Osamu Tsukimori and Yuka Obayashi
TOKYO, June 19 (Reuters) - High levels of a toxic substance called strontium-90 have been found in groundwater at the devastated Fukushima nuclear power plant in Japan, the utility that runs the facility said on Wednesday.
Strontium-90 is a by-product of the fission of uranium and plutonium in nuclear reactors as well as nuclear weapons, the U.S. Environmental Protection Agency says on its website.
The discovery of rising levels of such radioactive material is likely to complicate efforts by the utility, Tokyo Electric Power Co, to get approval to release into the Pacific Ocean what it calls water contaminated with low levels of radiation.
"This contaminated water should not be released to the ocean," said Michiaki Furukawa, a nuclear chemist and professor emeritus at Nagoya University. "They have to keep it somewhere so that it can't escape outside the plant."
Tepco is being overwhelmed with contaminated liquids as it flushes water over the three reactors at the seaside plant that had meltdowns after an earthquake and tsunami two years ago knocked out power and cooling systems.
High levels of tritium, a less harmful substance, had also been found, Toshihiko Fukuda, a general manager at Tepco, told a news conference.
Tepco did not believe any of the strontium-90 found in groundwater tests had leaked into the ocean, Fukuda said. The company has constantly revised announcements about radiation levels and other problems at the plant since the disaster.
Explosions that rocked the plant at the height of the crisis discharged large amounts of radioactive material into the atmosphere and surrounding land and ocean.
Tests of groundwater outside the turbine building of reactor No. 2 showed the level of strontium-90 had increased more than 100 times between December 2012 and May this year, Fukuda said.
He said it was likely that radioactive material entered the environment after water poured over the melted fuel in unit No. 2 and leaked out via the turbine building, located between the reactor and the ocean.
Testing of groundwater showed that strontium-90 increased from 8.6 becquerels to 1,000 becquerels per litre between Dec. 8, 2012 and May 24, Fukuda said. That level is more than 30 times the legal limit of 30 becquerels per litre.
"Tepco needs to carry out more regular testing in specific areas and disclose everything they find," added Furukawa, the nuclear chemist.
Testing also showed 500,000 becquerels per litre of tritium on May 24, compared with the legal limit of 60,000 and 29,000 on Dec. 8, 2012. A becquerel is a measure of radioactive decay.
Tepco has struggled with the clean-up of Fukushima, the site of the world's worst nuclear disaster in 25 years. It said in April it was running out of capacity to store the water contaminated in its still-makeshift cooling system.
Adding to its difficulties, about 400 tonnes of groundwater flow daily into the reactor buildings only to be mixed with highly contaminated water from cooling the melted fuel.
It has been trying to convince sceptical local fisherman that it is safe to dump 100 tonnes of the groundwater a day into the ocean to reduce the strain on its storage facilities.
Earlier this month the company reversed a claim that the groundwater flowing into the damaged basements of reactor buildings was not contaminated.
Recent mishaps, including two power outages, have heightened concerns about Fukushima's stability and called into question Tepco's ability to decommission the plant, which may take more than 30 years.
The Fukushima catastrophe highlighted failings in the oversight of the nuclear industry and prompted an overhaul of safety standards, which the country's nuclear regulator finalized on Wednesday.
The rules will take effect on July 8, after Cabinet approval that is expected on Friday. The Nuclear Regulation Authority did not make major changes to a draft released in April for public consultation.
All but two of Japan's reactors have been shut down after the disaster, forcing the country to import costly fossil fuels, keeping its trade in deficit for 11 straight months.
Nuclear plant operators are expected to quickly apply to restart reactors, Japanese media have reported. Inspections will take at least six months, the NRA has said. (Additional reporting by Kentaro Hamada; Writing by Aaron Sheldrick; Editing by Clarence Fernandez)