TOKYO (REUTERS) - Japan's Finance Ministry proposed crafting a cover story with a school operator at the heart of a political scandal to justify a discount in the price of public land sold to the school, a ministry official said on Monday (April 9).

The admission is likely to increase pressure on Prime Minister Shinzo Abe to resign over the scandal involving the sale of state-owned land to school operator Moritomo Gakuen, which had ties to Mr Abe's wife.

Mr Abe has repeatedly said that neither he nor his wife were involved in the land sale and that he would resign if he were found to be involved.

Opposition lawmakers have called for Mr Abe's resignation.

"Last year on Feb 20 a finance bureau employee contacted Moritomo Gakuen's lawyer... and suggested saying a lot of money was spent on the removal of rubbish and thousands of trucks were used," Mr Mitsuru Ota, head of the Finance Ministry's finance bureau, told parliament.

"Moritomo's lawyer did not take any action on this phone call. It was wrong for us to ask Moritomo Gakuen to say something that was not true," Mr Ota said, adding that the attempt to cook up a story was "highly embarrassing".

Mr Ota's comments confirmed a report by public broadcaster NHK last week and followed a March 12 admission by the ministry that it had altered documents relating to the land sale.

The plot of land in Osaka, western Japan, was appraised to be worth 956,000,000 yen (S$11.75 million) but the ministry granted the school operator an 820,000,000 yen discount.

It originally said the sale was appropriate and was heavily discounted to offset the costs of removing a lot of rubbish buried on the plot.

Prosecutors in Osaka arrested the operator of Moritomo Gakuen and his wife in July last year on suspicion of illegally receiving government subsidies.

The National Board of Audit, which is independent of the cabinet and has the authority to investigate spending by government agencies, said in November there was not enough evidence to support the heavy discount.

That increased speculation that Moritomo Gakuen's operator used his ties with the prime minister's wife to secure the discount.

The scandal is eroding Mr Abe's public approval ratings.

A survey on Monday showed voters who disapproved of Mr Abe's Cabinet outnumbered those who support his Cabinet for the first time in six months.