TOKYO - A SENIOR lawmaker defected from Japan's ruling party on Tuesday, casting a shadow over the struggling government after it pushed ahead with a controversial budget aimed at reviving Asia's largest economy.

Mr Yoshimi Watanabe, former minister for administrative reforms, had pressed unpopular Prime Minister Taro Aso to call snap elections and scrap a plan for cash handouts to the public totalling two trillion yen (S$32.8 billion).

The 56-year-old, whose father was a well-known foreign minister, announced he had left the Liberal Democratic Party (LDP) just after a key parliamentary committee approved an extra budget for the current year.

Mr Watanabe showed a packed news conference a letter stating he had left the LDP, which has been in office for all but 10 months but is widely seen as at risk of losing elections, which must be held by September.

'I am leaving the party out of my conscience as a politician,' he said.

Mr Watanabe is expected either to stay independent or form a new party.

He argued that Mr Aso's cash stipends were a gimmick that would do little to lift Japan out of recession while worsening the country's ballooning debt.

But the budget committee of the lower house pressed ahead and passed the emergency spending for the current year through March, virtually ensuring it will come into force.

The opposition controls the less powerful upper house but the lower chamber can override it.

Mr Aso said that the cash handouts were needed to lift Japan, where companies are slashing tens of thousands of jobs as overseas demand dries up for cars, electronics and other export.

The current economic crisis 'is a once-in-a-hundred-years event that no one has experienced', he told the parliamentary committee.

'In the short term, it is the right move to stimulate the economy by fiscal measures,' Mr Aso added. -- AFP