The United States isn't seeking to mediate an escalating dispute between China and Japan over the Diaoyu Islands but will continue to encourage the two Asian powers to resolve the matter through diplomacy, a senior US diplomat said Friday.

Kurt Campbell, assistant secretary of state for East Asian and Pacific affairs, told reporters at a briefing in New York that the US has a strong interest in seeing the territorial dispute handled through dialogue. Any military action in search of a solution would be "unwise", he said.

Various US diplomats have exchanged ideas with counterparts from Asia-Pacific countries this week during the start of the annual session of the United Nations General Assembly in New York, Campbell said.

"We are trying to send an overarching message that it is strongly in the interest of all countries, including the United States, that territorial matters be handled carefully, and that we very much want cooler heads to prevail in the current environment, and that we are seeking to support quiet, effective diplomacy across the border," he said.

US officials have said Washington would remain neutral in the dispute, but also said the US-Japan security treaty signed after World War II includes the Diaoyu Islands. The mixed message has prompted speculation that the US might seek to play the role of mediator.

But Campbell, speaking on the perimeter of this week's UN meetings, insisted that Washington has no intention to act as a mediator in the dispute and said it is up to China and Japan to work out their differences and discuss potential solutions.

"We have indicated quite clearly that this is a matter for diplomacy between the two countries, and the United States has no intention [of] and we are not playing a mediating role," the State Department official said.

"We have high confidence in the judgment and recognition on both sides of the importance of this relationship," Campbell said.

He said it is a widely shared view in the Asia-Pacific region that the US should refrain from taking an active role in the standoff.

"We think it is appropriate. … We think it is a responsible view as well. So the United States is not going to play that kind of role going forward."

Since April, the historically sensitive Chinese-Japanese relationship has been strained by the row over the East China Sea islands. Shintaro Ishihara, the right-wing mayor of Tokyo, recently announced plans on behalf of the city's government to "purchase" the islands from a "private owner".

Earlier this month, amid strong opposition and serious warnings from Beijing, the Japanese government claimed to have "purchased" three of the Diaoyu Islands chain, which belongs to China.

Following nationwide protests, Beijing sent two China Marine Surveillance patrol ships to waters around the islands and suspended ceremonies marking the 40th anniversary of the establishment of diplomatic ties with Japan. Trade between the two countries has also been affected by the dispute.

On Thursday at the UN General Assembly, Foreign Minister Yang Jiechi strongly urged Japan to end its violation of China's territorial sovereignty, saying Tokyo "stole" the Diaoyu Islands from China.