China will this month start allowing tourists to visit the Paracel Islands, one of a group of disputed islets and reefs in the South China Sea, state news agency Xinhua said, a move likely to irk rival claimant Vietnam.

A cruise ship that can accommodate 1,965 passengers is ready for sailing to the Paracels, known in Chinese as Xisha, Xinhua reported, citing ship owner Haihang Group Corp.

Hainan Harbour and Shipping Holdings Co is building another cruise ship.

"Tourists will eat and sleep on the cruise ships and can land on the islands for sightseeing" ahead of Labour Day on May 1, Tan Li, vice governor of China's southernmost island province of Hainan, told Xinhua late on Saturday.

There is only one hotel with 56 rooms on the two-sq-km Woody Island, the largest island in the Paracels, the agency said.