Faced with deadlock in parliament where the opposition controls one house, embattled Prime Minister Yasuo Fukuda announced his resignation on Monday some 11 months after his predecessor Mr Shinzo Abe also suddenly gave up.

'The LDP is now showing signs of terminal illness as the party has lacked politicians with strong leadership,' said Dr Tetsuro Kato, a professor of politics at Hitotsubashi University in Tokyo.

Unless the next prime minister manages to revive its fortunes, the LDP faces a serious risk of losing the next general elections, due by Sept 2009, analysts said.

'Although one shouldn't make premature conclusions, the resignation may be the beginning of an end to LDP politics,' said Prof Yoshinobu Yamamoto, professor of international politics at Aoyama University in Tokyo.

The LDP, created in 1955 in a merger of two conservative parties, helped Japan recover from the devastation of World War II to become the world's second largest economy.

The party has stayed in power for all but 10 months since then, relying on strong support from business interests and small towns, which were lavished with construction projects.

The party began its decline in the early 1990s after the Japanese economic miracle crashed. It has since survived with the help of coalition partners, currently the centrist Buddhist-oriented New Komeito party.

Reformist leader Junichiro Koizumi restored the troubled party with a landslide win in 2005 by running against the LDP's old guard, although some analysts say he alienated the party's most steadfast backers in rural areas.

The party has sunk again with people angry at scandals involving LDP politicians, errors in pension funds records, a costly new medical coverage plan and soaring prices of oil and food.

Analysts said Mr Fukuda likely quit earlier than usual due to disagreements with New Komeito, which has tried to keep a greater distance from the LDP for political reasons.

'A standstill in talks with the Komeito is obviously a major cause for the resignation,' Dr Kato said.

The LDP plans to pass controversial legislation to continue a mission backing the 'war on terror' in Afghanistan, despite hesitation by the pacifist New Komeito.

Analysts said the decline of the LDP could offer a chance for Japan finally to develop a true two-party system.

'Japan is a rare developed country with no experience in power change, which is abnormal for a modern democracy,' said Professor Yoshikazu Sakamoto, emeritus professor of politics at the University of Tokyo.

'It is obvious that there is a limit to LDP politics,' Prof Sakamoto said. 'It's a good opportunity for Japan to see a power shift. Otherwise, Japan will remain a developing country in terms of politics.'

However, the main opposition Democratic Party has also struggled in the polls. Last week, a handful of party members defected in a rebellion against their strong-armed leader Ichiro Ozawa.

Instead of a two-party system, some analysts predict the LDP and opposition will eventually form a grand coalition in hopes of bringing stability.

'Frequent change in premiership may raise distrust about Japan in the international community,' Prof Yamamoto said.

'Japan needs to map out long-tern, stable policies on both the economy and diplomacy, or it will be left behind in international politics,' he added. -- AFP