A dramatic showdown involving allegations of assault and kidnapping continued in the Antarctic on Wednesday, with Japanese whalers still to hold two environmental activists against their will aboard their vessel.

But in Tokyo later Wednesday, Japanese officials said they are prepared to release the activists.

The Japanese whalers seized two Sea Shepherd Conservation Society activists, Australian Benjamin Potts and Britain Giles Lane, when the pair boarded the Yushin Maru No. 2 late Tuesday, intending to demand an end to the whaling.

A spokesman for the Institute of Cetacean Research, Glenn Inwood, said the Japanese are willing to negotiate a release of the men, but crew on board the Yushin Maru appear to be in a deadlock with the environmental activists.

The whalers had sent an e-mail to the Sea Shepherd demanding the activists agree to cease filming and taking any violent action against them if the men are released, the group's leader Capt. Paul Watson said from his vessel, the Steve Irwin.

"We are just ignoring that e-mail. By making that demand they are actually saying that the two crew members are being held as hostages until we meet their demands...that is the definition of terrorism," Watson said.

Also in Tokyo, Japan's Fisheries Agency added it will temporarily suspend whaling until the activists are freed so the Japanese fleet will not meet resistance again.

The agency says it has called on the Sea Shepherd Conservation Society to take back its activists.

Sea Shepherd so far has not responded, possibly because it is trying to bar the Japanese whalers from resuming their work, an agency official said.

The agency also intends to notify the Australian government that it is releasing the activists.

After consulting other ministries and agencies, including the Foreign Ministry, the Fisheries Agency decided to free the pair after concluding that they boarded the Japanese vessel to hand over a letter of protest and that they did not harm the boat.

The agency also admitted the Japanese crew tied up the activists.

"It is quite deplorable to use violent tactics to sabotage legal research activities," an agency official said.

Chief Cabinet Secretary Nobutaka Machimura said, "The Japanese government strongly condemns the dangerous act (of the anti-whaling) campaigners."

In the Antarctic, the Steve Irwin reported it had lost sight of the Japanese vessel on its radar but was hoping to catch up to it soon.

Both sides have traded accusations in the escalating confrontation, with the Japanese whalers branding the activists pirates who are acting illegally, and the Sea Shepherd saying its crew were tied up and assaulted by the Japanese.

The Australian government asked the Japanese late Tuesday to return the activists to their vessel.

Australian Foreign Minister Stephen Smith said Japanese government officials had agreed to the request, but the handover had not yet taken place.

"The most important thing here is the safety and welfare of the two men concerned and we do, as the Australian government, want their immediate release," Smith said.

The dramatic clash followed a landmark ruling Tuesday by the Australian Federal Court, which issued an injunction banning whaling in Australian Antarctic waters.

The court ruled that whaling in the protected area of Australia's Antarctic claim, which is not recognized by the Japanese, is illegal under Australian law and must be stopped.

The decision also ramped up the pressure on the Australian government to act against whaling.

But in Tokyo on Wednesday, Machimura called the court order "unacceptable," saying, "The international consensus is that no country has territorial jurisdiction over Antarctica. The ruling will have no impact on (the Japanese whaling fleet's) legal activities in the high seas."

And an Australian expert on international maritime law has come down on the side of the whalers, claiming the two activists who boarded the Yushin Maru No. 2 could be considered pirates in breach of international and Japanese law.

"The unauthorized boarding of any vessel on the high seas raises, in the current international security environment, significant issues. These actions could be viewed as a breach in the first instance of Japanese law, because it is a Japanese flagged whaling vessel that was boarded," Don Rothwell a professor at Canberra's Australian National University, claimed.

Rothwell said the whalers had acted within their rights to detain the activists.

"Any unauthorized boarding of a vessel under these circumstances gives to the master of the vessel a clear capacity to detain these persons to try to verify their intentions," Rothwell said. "Their detention is perfectly appropriate and reasonable, in much the same way as any person who uninvited entered anyone's home can be detained for effectively trespassing."

Australian Foreign Minister Smith refused to be drawn when asked which side was in the right, saying only that Australian Federal Police are investigating the Sea Shepherd's claims of assault and the whalers' counterclaims.

Commercial whaling was banned by the International Whaling Commission in 1986.

And although Japan sells meat from the whales it kills, a technical loophole allows it to kill the mammals so long as it is for "scientific" purposes.

Sea Shepherd maintains that what Japan is doing is illegal and contravenes global treaties such as the Convention on International Trade in Endangered Species.

The Japanese plan to kill 935 minke whales and 50 fin whales during this year's three-month season.