'Today, I have decided to resign. We need a new line-up to cope with a new session of parliament,' Mr Fukuda told a hastily arranged news conference.

Mr Fukuda said he had already spoken to Taro Aso, the current head of the ruling Liberal Democratic Party and the man likely to succeed him, about arranging a leadership election.

Mr Taro Aso is a former foreign minister who is known for being both more charismatic and more conservative than the 72-year-old Fukuda.

'I believe there will be an election for the party leader. The leader will be appointed as the prime minister,' Mr Fukuda told a news conference.

He did not name a date.

Mr Fukuda said he made the decision in light of the tense situation in parliament. The opposition Democratic Party won control of one house last year and has aggressively fought Mr Fukuda's agenda.

'The Democratic Party has tried to stall every bill so it has taken a long time to implement any policies. For the sake of the Japanese people, this should not be repeated,' Mr Fukuda said.

Mr Fukuda's Liberal Democratic Party (LDP) has been in power for all but 10 months since its creation in 1955. Mr Fukuda did not have to call elections until September next year.

Japan opposition seeks early election
Japan's opposition on Monday criticised Mr Fukuda for resigning and called for early elections.

Mr Naoto Kan, deputy head of the main opposition Democratic Party, said that the next prime minister should 'promptly dissolve the House of Representatives' and call a snap general election.

He noted that Mr Fukuda was the second prime minister to quit without Japan holding a general election.

'They have thrown away the government a second straight time,' Mr Kan told reporters.

The opposition has vowed to wrest political control in the next election.

Mr Fukuda took office nearly a year ago in hopes of reviving the LDP, but he faced an uproar for introducing a hugely unpopular medical coverage plan that raises costs for many elderly people.

Mr Fukuda on Friday unveiled a 11.7-trillion-yen (S$152.3 billion) stimulus package, although some economists doubted it would give a long-term boost to the economy.

A poll out earlier on Monday said that his government's approval rating had slumped nine points in the past month to 29 per cent, erasing most of the bounce he received from reshuffling his cabinet a month ago.

The poll tipped Mr Aso as the most popular candidate to replace Mr Fukuda. -- AFP