The operator of the Fukushima Daiichi nuclear power plant should be stripped of responsibility for decommissioning the wrecked facility, according to Japan's governing party, as the utility prepares for the most dangerous phase yet in the cleanup operation.

Among the options outlined in a proposal by the Liberal Democratic party (LDP) is a new decommissioning unit that is financially independent of Tepco. Another option is the formation of a government-affiliated administrative agency.

The proposal comes amid mounting criticism of Tepco's handling of problems at the plant, including leaks of radioactive water.

The firm is expected to begin removing 1,300 spent fuel assemblies from the remains of the reactor No 4 building towards the middle of next month. Some nuclear experts have warned that even a slight mishap involving the fuel rods could result in huge releases of radiation into the air and sea.

Shunichi Tanaka, the head of Japan's nuclear regulation authority, warned that the work would be more hazardous than usual because of debris that fell into the reactors storage pool during hydrogen explosions in March 2011.

"It's a totally different operation than removing normal fuel rods from a spent fuel pool," Tanaka said. "They need to be handled extremely carefully and closely monitored. You should never rush or force them out, or they may break. I'm much more worried about this than I am about contaminated water."

Toyoshi Fuketa, a senior member of the authority, said the fuel rod removal would mark a "major step towards decommissioning".

This week Tepco released a video explaining its plan to remove the rods, which were being stored in a pool 100ft above ground when the plant was struck by the 11 March 2011 tsunami.

Three other reactors suffered core meltdowns in the disaster, forcing the evacuation of 160,000 people in the area.

A remote-controlled crane installed inside the reinforced reactor building will perform the delicate task of removing the spent fuel, Tepco said in its video.

One by one, the fuel assemblies will be lifted out of storage and placed in dry casks before being moved to a common cooling pool in an adjacent building. "This transfer from one form of underwater storage to another will not lead to any radiation exposure to workers or anyone else," the company said.

Tepco hopes to complete the job by the end of next year before clearing out other fuel pools. Work to remove molten fuel from deep inside three other damaged reactors is not expected to start until 2020.

The LDP panel, which will present its report to the prime minister, Shinzo Abe, next week, reportedly favours the creation of a special unit to focus on decommissioning while the rest of the company is left to generate electricity for 29m homes and businesses in Tokyo and surrounding areas.

Tepco is hoping to receive the go-ahead to restart its Kashiwazaki-Kariwa plant, the biggest atomic facility in the world, in Niigata prefecture early next year. The firm believes that if all seven of the plant's reactors were restarted it could save $1bn (£623m) a month on fuel costs.

Niigata's governor, Hirohiko Izumida, has not ruled out a restart, but says the firm must first address its culture of "institutionalised lying", citing the firm's belated admission in July that the plant was leaking radioactive water into the Pacific ocean.

"If they don't do what needs to be done, if they keep skimping on costs and manipulating information, they can never be trusted,"Izumida said.

The company faces a multibillion-dollar bill for compensating evacuees. Decommissioning the plant is expected to take around 30 years and cost at least ¥100bn (£634m). The utility, which has lost $27bn since March 2011, was effectively nationalised last year after the government injected ¥1tn of public funds.

On Thursday, Japan's deputy prime minister and minister of finance, Taro Aso, hinted that the government would step in to fund the decontamination of towns and villages in the evacuation zone around the plant.

Tepco is currently required to repay the government for decontamination costs but has reportedly asked for exemption from the payments, which one study has put at as much as ¥5tn.

Aso said: "I wonder if we can put all the blame on Tepco, given that nuclear policy was framed by the national government."