Japan PM woes persist before vote; party in disarray

TOKYO (Reuters) - Japan's ruling bloc voted down a no-confidence motion against embattled Prime Minister Taro Aso on Tuesday, but chaos deepened within his party as fears grew of a historic defeat in a national election next month.

A loss for Aso's coalition in the August 30 general election would end half a century of nearly unbroken rule by the pro-business ruling Liberal Democratic Party (LDP), struggling to revive the economy with massive stimulus spending.

The LDP's woes have raised the chances of the opposition Democratic Party taking control of the lower house and breaking policy deadlocks in parliament, where opposition parties already control the upper chamber and can delay bills.

The Democrats, trying to make the most of the LDP's falling popularity before the election, submitted a no-confidence motion in the lower house against Aso's cabinet by criticizing its economic policies.

"The cabinet has been spending large amounts of money for the economy but we can only think that it was aimed at winning support for the election," said Democratic Party leader Yukio Hatoyama. "The measures won't improve people's livelihoods."

As expected, the motion was rejected by the ruling bloc's majority, although a non-binding but embarrassing censure motion against Aso was adopted by the opposition-controlled upper house. The Democrats plan to boycott debate in parliament before Aso dissolves the lower house early next week.

The Democrats hoped that by forcing LDP lawmakers to back Aso, it would make it harder for his critics in the party to persist in trying to dump him ahead of the election.

Alarmed by falling public support for Aso, lawmakers in the long-ruling party have openly called for him to quit ahead of the election and bring forward a vote for the party leadership set for September.

PARTY DISARRAY

Former LDP Secretary-General Hidenao Nakagawa repeated calls for a leadership change, but Aso has refused to quit.

"We must fight now and it is as a matter of course that we fight united," Aso told a meeting of lawmakers. "Unless we are united, we won't be able to fight well."

Japan has had four LDP leaders in four years and voters may not be impressed with another change at the top. The party lacks an obvious successor who could guarantee a jump in popularity and boost the LDP's chances in the national poll.

The Democratic Party was not without its own headaches after party leader Yukio Hatoyama apologized for the fact that some people listed as his political donors were dead.

The Democrats' ambitious spending plans have also come under scrutiny from financial analysts, with some saying policies such as cash allowances for families and free highway tolls could lead to more government bond issuance and push up yields.

But domestic media have focused on the disarray spreading within the LDP. On Tuesday, its chief election strategist, Makoto Koga, offered to quit, although the party's No. 2 said he would not accept the resignation.

LDP lawmaker Koichi Kato said party leaders had yet to reach consensus on whether to hold a meeting of lawmakers from both chambers of parliament, sought by many of Aso's critics.

"The secretary-general talked at great length at the end," he told reporters after a party gathering. "But then a lot of people started to leave the room and in the end there was no conclusion."

(Additional reporting by Linda Sieg, Yoko Kubota; Editing by Chris Gallagher and Nick Macfie)