Japan and the US proposed to investigate and act against international anti-whaling activists from the Sea Shepherd Conservation Society as part of a political deal to reduce whaling in Antarctic waters.

Four confidential cables from the US embassy in Tokyo and the state department in Washington, released by WikiLeaks, show US and Japanese diplomats secretly negotiating a compromise agreement ahead of a key meeting last year of the International Whaling Commission, the body that regulates international whaling.

The American proposal would have forced Japan to reduce the number of whales that Japan killed each year in the Antarctic whale sanctuary in return for the legal right to hunt other whales off its own coasts. In addition, the US proposed to ratify laws that would "guarantee security in the seas" – a reference to acting against groups such as Sea Shepherd that have tried to physically stop whaling.

The US proposal was eventually shot down by Britain and the EU in June 2010, but the cables show that the Sea Shepherd group had become a political embarrassment to Japan after stopping its whaling fleet reaching its annual quota of whale killed for several years.

The group, led by Captain Paul Watson, a co-founder of Greenpeace, has a reputation for physically confronting whalers, sealers and illegal fishing boats. Its flotilla of ships, which sport the skull and crossbones flag, monitors illegal fishing in the Galapagos islands and spends months each year following and harassing the Japanese whaling fleet in frequently dangerous clashes.

Yesterday two Sea Shepherd ships, the Steve Irwin and the Gojira were involved in cat and mouse skirmishes with two whaling ships. Activists reportedly hurled stink bombs onto the deck as whalers tried to use water cannon.

The US cables show how on 2 November 2009, Shuji Yamada, Japan's vice-minister for international affairs, asked lead US negotiator Monica Medina about an investigation of the tax affairs of Sea Shepherd. It is unclear whether the US government had already launched an investigation or which country had proposed it.

"Yamada inquired about an investigation into the tax status of the US-based NGO Sea Shepherd Conservation Society and repeated Japan's request for the US to take action against the organisation, which he said created a very dangerous situation on the seas," says one cable.

The US government dodged this request but the cable continues: "The DCM replied that the US places the highest priority on the safety of vessels and human life at sea, and added that if any violations of US law are discovered, we will take appropriate enforcement action".

But the Japanese diplomats then responded, "It would be easier for Japan to make progress in the IWC negotiations if the US were to take action against the Sea Shepherd".

One week later, the Japanese pressed the US to take action against Sea Shepherd again, saying that "violent protests by the Sea Shepherd Conservation Society (SSCS) could limit the government of Japan's flexibility in the negotiations".

It appears from the diplomatic chatter that the US did look into the NGO's status. In the same cable, Medina is reported as saying that the US government, "can demonstrate the group [Sea Shepherd] does not deserve tax exempt status based on their aggressive and harmful actions".

The cables then suggest that the US had itself proposed the tax investigation of Sea Shepherd, saying in the same cable on 9 November 2009: "the Netherlands should have primary responsibly for taking action against the SSCS, but he [the Japanese diplomat] appreciates the US government initiative to address the group's tax exempt status".

The US attempt to compromise with Japan failed at the IWC meeting in June after a majority of countries, led by Australia, the European Union, and the Latin American nations rejected it.

In a statement made yesterday from the Sea Shepherd flagship, Captain Watson said: "The US government may have very well looked into Sea Shepherd's activities and if they did so, then they obviously did not find any irregularities or unlawful activities because Sea Shepherd was never contacted by any US government official in connection with this matter. For Sea Shepherd, the most important part of this document is the declaration by Japan that Sea Shepherd has been responsible for the whaling fleet not reaching their quotas for the last few years. This completely validates Sea Shepherd's actions as effective."