Gillard, who is on a four-day visit to Japan, toured the coastal town of Minamisanriku in Miyagi prefecture, one of the worst-hit areas in the March 11 quake and tsunami that left nearly 30,000 people dead or unaccounted for.
She visited the disaster-hit town, where Australian rescuers had worked last month, along with Japan's Foreign Minister Takeaki Matsumoto, Kyodo news agency reported.
More than 1,130 people were killed or went missing in the town, which had a population of 17,600, following the twin disaster.
Gillard was briefed on the situation there by Minamisanirku Mayor Jin Sato, who himself barely survived the disaster at the town's disaster prevention office building. A local photographer had taken a picture of Sato and other officials clinging to the top of the structure when the tsunami engulfed the three-story building.
"It is miraculous that anyone survived such devastation," Gillard was quoted as saying. "It's been amazing to see the spirit of the people... even in such difficult, difficult circumstances."
The prefectural government of Fukushima, where the crisis-hit nuclear plant is situated, is considering implementing regular health checkups for its residents, in the wake of the atomic emergency there, its officials were quoted as saying.
Prime Minister Naoto Kan said his government would most likely need to issue new bonds for a sizeable second extra budget, expected to be drawn up around June, to finance reconstruction work in the quake-tsunami-hit northeastern region.
He remarks came after authorities announced a USD 50 billion emergency budget for reconstruction work in tsunami-hit areas and widened a 20-km evacuation zone around the Fukushima plant.
Meanwhile, Tokyo Electric Power Company (TEPCO), the operator of the crippled plant, has decided to be more cautious about the volume of cooling water injected into the spent fuel pool of one of its reactors.
This is due to fear that the reactor building might be further damaged by the weight of the water itself, national broadcaster NHK reported.
The company has been injecting water daily into the spent fuel pools of the reactors to prevent fuel rods from being exposed and further damaged.