The Japanese government has lifted the evacuation order for the first town near the crippled Fukushima reactors, more than four years after ordering mass relocations near the tsunami-wrecked nuclear plant.

Among communities where the entire population was forced to evacuate after the nuclear crisis started in March 2011, Naraha is the first town to allow all of its residents to return home permanently.

It is seen as a pilot case for nearby areas, with Prime Minister Shinzo Abe's government aiming to lift a raft of evacuation orders by March 2017.

But only about 10% of 7,368 registered residents of Naraha were expected to return home due to fears over continued nuclear contamination and uncertainty over whether enough locals, particularly young people, would come back to restart the community.

Local mayor Yukiei Matsumoto pledged Naraha's rebirth would finally be able to commence.

"The true reconstruction of our town will begin now," he said during a televised speech to his staff at the town hall.

"Let us work together for the creation of a new Naraha."

Meltdowns in three of the reactor 20km away blanketed vast tracts of land with isotopes of iodine and cesium, products of nuclear reactions that are hazardous to health if ingested, inhaled or absorbed.

Evacuation orders have already been lifted for selected spots of regional cities, with the government saying decontamination work has reduced radiation levels.

Former Naraha residents held a candlelight vigil overnight to mark the rebirth of their town. However, the town's future remains uncertain at best.

Many young people have found new jobs and started lives in cities far away from the crippled reactors, since leaving more than four years ago.

Naraha restaurateur Satoru Yamauchi, a father of four who relocated to Tokyo after the meltdown, has expressed his profound attachment to his home but said he cannot see himself restarting his business there.

"There is nothing good about going back," he told AFP in a recent tearful interview.

But authorities say Naraha is now safe after years of decontamination work, in which crews removed topsoil, washed exposed road surfaces and wiped down buildings.

Government data has also shown contamination levels are relatively lower in Naraha, which effectively resides upwind from the site of the nuclear disaster.

The end of the evacuation order is "based on citizens' real voices and plans to accelerate reconstruction," mayor Matsumoto said in a statement released in July, adding a "prolonged evacuee life is not desirable".

Still, activists have pointed out that many areas show high levels of contamination, and many are unfit for habitation.