One diplomat, speaking on condition of anonymity, described the 1984 sale of a uranium conversion plant as a "flagrant example" of the failure of export controls meant to keep such equipment away from rogue nations and terrorists.
Such plants are used in the process of enriching uranium that at lower levels can be used to generate power but at levels above 90 percent — or weapons grade — can be used in nuclear warheads.
The company was not named.
A report presented earlier this week to the board of governors of the International Atomic Energy Agency mentioned a "pilot scale uranium conversion facility" ordered in 1984 by Libya but did not specify the country of origin.
Japan's top government spokesman, Yasuo Fukuda, said Tokyo was looking into the findings by the U.N. nuclear watchdog agency.
"We are conducting an investigation. But we can't discuss the details of our investigation due to our previous agreement with the IAEA not to disclose anything," Fukuda said.
If confirmed, the transaction would violate Tokyo's strict export controls and its long-standing policy against possessing or trading nuclear weapons. Japan was the target of the only atomic bomb attacks.
One of the diplomats said Japan's export controls were generally considered effective, meaning the government must have known about the sales.
"Had Japan reported such a deal to the IAEA earlier, that could have helped to get an earlier start on" investigations of the nuclear black market, which only became exposed in recent months, he told the AP on condition of anonymity.
Unlike other deals made by Libya, Iran and North Korea, the sale was apparently directly arranged with the Japanese instead of through middlemen linked to a loose international nuclear sales network headed by Pakistani scientist Abdul Qadeer Khan, the diplomat said.
But other countries were involved because the packing material originated from outside Japan, a diplomat said. The plant components were subsequently moved within Libya to keep them hidden before being taken out of the country.
Libya owned up in December to having programs for weapons of mass destruction, including nuclear arms, and pledged to scrap them.
Earlier this week, the IAEA board of governors passed a resolution praising Tripoli for its admission but criticizing it for its earlier nuclear weapons plans. Libya also signed an agreement with the IAEA opening its nuclear program to far-reaching agency inspections.
Progress on Libya has been rapid since it agreed to give up its programs for weapons of mass destruction. A ship left the country for the United States last weekend carrying 500 tons of cargo — the last of the equipment that Moammar Gadhafi's government used for its nuclear weapons program.
Among the most startling discoveries in Libya were blueprints of a nuclear warhead from Pakistan supplied by the black market network that also sold technology and know-how to Iran and North Korea.
The IAEA report also found that Libya processed minute quantities of plutonium that — in much larger amounts — are used in the cores of nuclear warheads.
Libya did not manage to make enriched uranium or achieve other substantial successes in efforts to make nuclear arms.
Japan was named earlier by investigators active in the probe into the black market network, which also extends from Pakistan to Dubai, Malaysia, South Korea, Switzerland, Germany, Britain, the Netherlands and beyond — with potential ties to Syria, Turkey and Spain.
Investigators expect to complete the probe by June, eight months after U.S. officials confronted Pakistan with suspicions about Khan, setting into motion events that led the father of Islamabad's nuclear program to confess last month.
By George Jahn