* PM Kan apologises for confusion over stress tests
* Suggests future of nuclear business open to debate
* Kan's ratings lowest since Democrats took power in 2009 (Adds quotes, details)
By Linda Sieg
TOKYO, July 12 Japan has no choice but to reduce its reliance on nuclear power, Prime Minister Naoto Kan said on Tuesday, as the country battles to end a four-month-old radiation crisis at a tsunami-crippled nuclear plant.
The unpopular prime minister appears increasingly sensitive to growing public concern about nuclear power, but whether he oversees an overhaul of energy policy is in doubt as he has promised to resign, although he has not specified when.
"We must scrap the plan to have nuclear power contribute 53 percent (of electricity supply) by 2030 and reduce the degree of reliance on nuclear power," Kan told the panel.
The crisis at Tokyo Electric Power Co's Fukushima plant has sparked public debate over the role of nuclear power in quake-prone, resource-poor Japan, as well as immediate concerns about power shortages as 35 of the country's 54 reactors are currently off-line.
A 2010 basic energy plan had called for boosting nuclear energy's share of the electricity supply to 53 percent by 2030 by building at least 14 new reactors, but many politicians agree that is nearly impossible now given the growing public anxiety.
The crisis has also prompted discussions about whether to reform the way the nuclear power business, now the bailiwick of private utilities, is run.
"The question arises whether private companies can bear responsibility when considering the large risks involved with nuclear business," he told the panel.
"Examples from other countries show that this has not always been the case. I agree with the suggestion that discussions (including on nationalisation) are needed."
Kan, under fire for his response to the nuclear crisis, also defended his decision to introduce two-stage stress tests for reactors to soothe public safety concerns, but apologised for any confusion caused.
Last week's surprise announcement of the stress tests fanned corporate worries about summer power shortages if idled reactors remain off-line, and outraged some local officials who had been ready to approve reactor restarts after getting government safety assurances.
Kan has already begun a blank-slate review of Japan's energy policy and set a goal of boosting renewable energy sources' share to more than 20 percent of electricity by the 2020s.
Opinion polls show growing public concern about nuclear power, but Kan has so far been unable to tap those worries to turn around his flagging fortunes.
The unpopular premier is under heavy pressure from opposition parties as well as critics in his own party to keep a promise to step down.
Kan survived a no-confidence vote last month by pledging to hand over to his Democratic Party's younger generation, but has declined to specify when. (Additional reporting by Shinichi Saoshiro; Editing by Edwina Gibbs and Edmund Klamann)