* Budget increase sought as Japan, China remain locked in territorial row
* Japanese PM vows to stand tough on disputed islands
* Money also allocated to concerns over North Korea
By Kiyoshi Takenaka
TOKYO, Aug 30 (Reuters) - Japan's Defence Ministry said on Friday it was seeking a three percent increase in next year's budget allocation, the biggest rise in 22 years, with most of the growth linked to revised personnel costs and equipment imports made more expensive by a weaker yen.
The budget request for the year from April 2014 comes as Japan remains locked in a territorial spat with China over uninhabited East China Sea islets, fraying ties between Asia's two biggest economies and raising security concerns.
Saddled with hefty public debt, Japan had been cutting its defence spending in recent years. But Prime Minister Shinzo Abe, who returned to power last December for a rare second term pledging to stand tough in the islands row, increased this year's defence budget for the first time in 11 years.
The ministry said it planned to request 4.82 trillion yen ($48.97 billion) in budget appropriations, up 3.0 percent from the current year.
Following the earthquake and tsunami that devastated Japan's northeast in March 2011, government workers' salaries were cut by 7.8 percent on average to help finance reconstruction.
That temporary measure is set to expire next March, boosting the Defence Ministry's personnel costs by about 100 billion yen for the next fiscal year.
The ministry's spending plans for the next fiscal year include research on unmanned high-altitude surveillance planes and tilt-rotor aircraft, with actual purchases tentatively planned for the following year.
Japan hopes that tilt-rotor aircraft such as the Osprey and drones including Northrop Grumman Corp's Global Hawk will help it better defend remote islands.
The Osprey, built by Boeing Co and Textron Inc's Bell Helicopter unit, can fly as quickly as a plane but lands like a helicopter.
"In order to respond effectively to attacks on islands, it is indispensable to securely maintain superiority in the air as well as on the sea," a ministry release on the budget request said.
Since Japan purchased three of the disputed islets, called the Senkaku in Japan and Diaoyu in China, from a private Japanese owner last September, patrol ships from both countries have been shadowing each other near the islands.
That has raised fears that an unintended collision could lead to a broader clash.
Japan also faces potential threats from North Korea's nuclear and missile programmes. The Defence Ministry plans to set aside 1.7 billion yen next year to prepare for the stationing of Patriot Advanced Capability-3 (PAC-3) missile interceptors at its Tokyo headquarters.
In another move to strengthen its defences, the ministry aims to set up a force of Marines as soon as possible and plans to earmark 1.5 billion yen next year to introduce training facilities to improve its members' amphibious capabilities.
Japan's Coast Guard, whose ships are playing cat-and-mouse with Chinese vessels around the disputed islets, is requesting a 13 percent increase in funding to 196.3 billion yen for the next fiscal year as it builds new patrol ships and piers.
The Coast Guard aims to boost the size of its staff by 528 people, which would be the largest personnel expansion in decades. It also plans to order 10 patrol vessels.