TOKYO - JAPAN'S opposition on Tuesday pressed the unpopular government to fire a senior official who accused homeless people, many of whom have lost jobs in the recession, of laziness.

The gaffe was the latest blow to Prime Minister Taro Aso, whose approval rating has slumped to 20 per cent as voters question his handling of the financial crisis in the world's second largest economy.

Tetsushi Sakamoto, the vice minister for internal affairs and a lawmaker from MR Aso's Liberal Democratic Party (LDP), on Tuesday apologised for his comments about homeless people who spent the New Year period in a Tokyo park.

'I would like to retract my remarks from yesterday and apologise to those who are concerned,' MR Sakamoto said.

He had said on Monday: 'I wonder if those people really have the willingness to work.'

He suggested that volunteers who offered the homeless tents and free meals during New Year, Japan's most important holiday, had political intentions to embarrass the government.

About 300 people stayed in the 'tent village,' a short walk from the Imperial Palace and parliament. Some of the homeless took part in a rally on Monday demanding the government do more to stop companies laying off workers.

The labour ministry says 85,000 temporary-contract workers have already lost their jobs or know they will be laid off by March - a figure that has nearly tripled in a month.

Major companies such as Toyota Motor, Sony and Canon have all laid off employees on temporary contracts as global demand for their exports falls.

The main opposition Democratic Party of Japan (DPJ) sought Mr Sakamoto's dismissal.

'Those were incredibly disrespectful remarks against people who lost their jobs,' DPJ secretary general Yukio Hatoyama said during the year's first parliamentary questions.

'With all my might, I demand his immediate dismissal,' he said.

Mr Kiyomi Tsujimoto, a member of the left-wing opposition Social Democratic Party, blamed the government for a recent rise in homelessness, calling it a 'political disaster' caused by bad policies.

Mr Aso distanced himself from Mr Sakamoto's remarks but refused to sack him.

'The vice minister admitted the remarks were inappropriate and retracted them while apologising,' Mr Aso said.

Mr Aso has been under growing pressure, with a senior lawmaker threatening on Monday to quit his LDP unless the conservative leader calls snap polls. Japan must hold an election by September.

The LDP has been in power for all but 10 months since 1955 but is trailing the opposition in recent opinion polls due to criticism over the ruling bloc's gaffes, scandals and economic policies.

Mr Aso wants parliament to approve a series of bills aimed at reviving the economy. But the opposition demanded Tuesday he scrap a plan for 2.0 trillion yen (S$31.7 billion) in cash rebates.

'The cash rebate is said to be an extremely poor measure, which most of the public has criticised,' Mr Hatoyama said, calling for Mr Aso instead to use the money to support single mothers, the elderly and destitute people.

Mr Aso said the rebates - which would be worth 64,000 yen for a family of working-age parents and two children - will help 'stimulate the economy.' 'I hear some people say they are waiting for the cash stipend,' Mr Aso said.

The opposition argues that the rebates are a gimmick designed to buy votes while even some LDP lawmakers believe they would be ineffective and irresponsible as Japan has a soaring public debt. -- AFP