The problems with the Fukushima nuclear plant have raised questions over Tepco's future Tepco has been trying to contain radiation that started leaking from the plant when it was hit by the 11 March earthquake and tsunami.
The company said that it planned to stick to its timetable of getting the plant under control by January.
Tepco had said earlier that rods at its Number 1 reactor had also melted down. It was thought that a similar problem had occured in the other reactors but it was difficult to confirm.
"Based on our analysis, we have reached the conclusion that a certain amount of nuclear fuel has melted down," Ken Matsuda, a Tepco spokesman told the BBC.
The company has been trying to cool the reactors and get the unstable fuel rods back under control.
Last week, the president of Tepco, Masataka Shimizu, resigned. He will be replaced by managing director Toshio Nishizawa.
The announcement came on the same day the company reported an annual loss of 1.25tn yen ($15.3bn; £9.4bn).
Tepco's loss is a record for a non-financial firm in Japan.
The company's share price has fallen more than 80% since the earthquake.
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