TOKYO - JAPAN'S parliament on Wednesday enacted legislation required to go ahead with a controversial plan to hand US$20 billion (S$31 billion) back to the public to fight the recession.

In a rare revote, Prime Minister Taro Aso's coalition won approval with a two-thirds majority in the lower house, despite a boycott by two ruling party officials, including popular former prime minister Junichiro Koizumi.

The cash handouts worth two trillion yen are the most contentious part of the 4.8-trillion-yen extra budget, which also includes loans for unemployed workers and financial support for ailing banks.

Mr Aso, now faced with a plunge in public support, has voiced hope the cash handouts would jump-start weak consumer spending in Asia's largest economy, which is suffering from its first recession in seven years.

But opinion polls show that most of the public believes the handouts - averaging 12,000 yen a person - would be a waste of money.

Earlier in the day, the opposition-controlled upper house voted down the legislation necessary for the government to shift funds from its fiscal investment account to its general account for the handout scheme.

But then the lower house, where the ruling coalition holds a commanding majority, used its constitutional power to approve the bill by overriding the upper house, parliament officials said.

The spending plan is the second round of supplementary funding for the year until March, after an initial injection of 1.81 trillion yen.

With high-risk elections expected within months, Mr Koizumi attacked the handout programme last month, fuelling speculation that the ex-premier's rebellious move may lead to a split of the party.

Mr Koizumi, a reformist who was prime minister from 2001 to 2006, was one of Japan's most popular leaders in recent times. Since he stepped down, the LDP has slumped in the polls. -- AFP

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