TOKYO (REUTERS) - The United States has cancelled a military exercise with Japan because of the US fiscal standoff, Japan's Defence Ministry said on Tuesday, underscoring the extent of the impact of the US congressional deadlock.

The cancellation comes days after the United States and Japan agreed to modernise their defence alliance for the first time in 16 years to address concerns about North Korea's nuclear programme, global terrorism, cyber intrusions and other 21st century threats.

Military exercises between Japanese and US forces are the integral part of the alliance, but they have sometimes been a cause of irritation for China, with which Japan is locked in a territorial dispute.

The US army and Japan's Ground Self-Defence Force planned to conduct an exercise in northeastern Japan, from Oct 15 to Oct 28, mobilising 400 service men and women from the United States and 600 from Japan.

But the US side asked for the cancellation citing the failed attempt by Congress to reach a deal to fund the federal government in the new fiscal year that began on Oct 1, the Japanese Defence Ministry said.

"This is the only case that has been affected but if cancellations continue on other events, the impact would be substantial," a ministry spokesman said.

The Japanese Ground Self-Defence Force started a joint drill with the US Marine Corps in Shiga prefecture, central Japan, on Tuesday, one day late because of a typhoon.

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