* More than 80 Japanese nationalists near disputed islands
* Move comes amid tensions between Japan and China
* Some 168 lawmakers pay respects at Yasukuni Shrine (Adds shrine visit by MPs, background)
By Ruairidh Villar
EAST CHINA SEA, April 23 (Reuters) - Japanese nationalists sailed a flotilla of boats on Tuesday in waters near islands at the centre of a row between China and Japan, putting further strain on Tokyo's tense ties with Beijing as a group of more than 160 Japanese lawmakers visited a shrine seen by critics a symbol of Japan's past militarism.
Last year members of the same right-wing group landed on one of the disputed islets and triggered anti-Japanese protests in China, where lingering bitterness over Japan's wartime aggression has been rekindled in recent days.
China blasted Tokyo for a lack of contrition over its past on Monday after Prime Minister Shinzo Abe made an offering and Deputy Prime Minister Taro Aso and two other ministers visited the Yasukuni Shrine, which honours 14 leaders convicted as war criminals by an Allied tribunal along with Japan's war dead.
South Korea's foreign minister cancelled a trip to Japan. Homage paid by leading Japanese politicians at the Tokyo shrine typically angers Japan's neighbours, who contend that it glorifies wartime atrocities.
"It is natural for lawmakers to worship at a shrine for people who died for the nation and every nation does this," Hidehisa Otsuji, a ruling Liberal Democrat Party (LDP) lawmaker who chairs the parliamentary group behind the visit, told a news conference. "I don't understand why we get a backlash."
A group of 169 lawmakers visited Yasukuni for its spring festival, more than double the usual number in recent years.
Aso also shrugged off the rebuke. "I first visited Yasukuni on April 28, 1953 and often went there ever since," Aso, who doubles as finance minister, told reporters.
"I go there two or three times every year and it's not something that should be taken up now. There's a reaction from overseas? But that's their reaction and I don't think it will much affect Japan's diplomatic relations with other countries."
A group led by LDP Vice President Masahiko Komura has cancelled a trip to China planned for early May, but said the move was not related to the Yasukuni visits.
Abe who has enjoyed sky-high popularity ratings of more than 70 percent since he took office in December and launched his "Abenomics" plan to boost growth and beat deflation with hyper-easy monetary policy, spending and structural reform.
The prime minister, who has said he regretted not visiting Yasukuni during his 2006-2007 term in office, has been walking a fine line between talking tough in the territorial row over the chain of rocky islets and leaving the door open for dialogue with Beijing.
Voters want Abe to put priority on fixing the economy rather than other issues close to Abe's heart, such as revising Japan's pacifist constitution, an opinion poll showed this week.
Japanese and Chinese patrol ships have been playing a cat-and-mouse game near the Japanese-controlled East China Sea islands, where China is seeking to assert its claim to sovereignty by sending ships into the disputed waters.
The flotilla of 10 boats carrying about 80 activists from the nationalist Ganbare Nippon ("Stand Firm, Japan") group sailed into waters around the islets early on Tuesday but then began to withdraw from the area on the orders of Japanese Coast Guard patrol ships, because Chinese government surveillance ships were nearby.
The Coast Guard, which had 13 ships shadowing the flotilla, said eight Chinese patrol ships had entered what Tokyo considers its territorial waters near the uninhabited isles, known as the Senkaku in Japan and the Diaoyu in China.
"The intrusion into territorial waters is extremely regrettable. In any case, the Senkaku islands are Japan's own territory without a doubt," Japanese Chief Cabinet Secretary Yoshihide Suga told a news conference.
"Japan strictly protests through diplomatic channels and demands they leave our waters swiftly."
Ganbare Nippon had said the purpose of their trip was to survey fishing grounds. Last August, about 10 activists from the group landed on one of the islets.
"This is all about asserting our ownership of the islands, going there to conduct a fishing survey to prove that Japanese fishermen can indeed make a living there," said group leader Satoru Mizushima.
Tit-for-tat landings by Chinese and Japanese nationalists last summer preceded a sharp flare-up in the dispute when Japan nationalised the islands in September, drawing angry rhetoric from Beijing and anti-Japanese demonstrations across China.
"If you encounter problems from Chinese vessels, please run away," Mizushima, a right-wing filmmaker, told activists at a briefing before the flotilla departed from Ishigaki, a Japanese island west of Okinawa, on Monday.
"Don't let them come on board, but try to avoid fighting or shouting insults. We want to show everyone that we are polite and upstanding Japanese citizens."
Japanese ships are allowed to sail to waters around the islets, but the Japanese government generally prohibits landing.
The waters around the islets are rich fishing grounds and also have potentially huge oil and gas reserves.
The territorial dispute has escalated in recent months to the point where China and Japan have scrambled fighter jets while patrol ships shadow each other, raising fears that an unintended collision could lead to a broader clash.
Ganbare Nippon is not officially affiliated with any political party, but its members have organised rallies to support Abe, who swept to power last December promising economic revival and a more assertive stance towards Japan's neighbours. (Additional reporting by Kiyoshi Takenaka and Kaori Kaneko in Tokyo; Writing by Antoni Slodkowski and Linda Sieg; Editing by Alex Richardson)