Japanese Prime Minister Yukio Hatoyama and his powerful No.2 quit today to try to boost the ruling party's faltering fortunes in an election next month, less than a year after sweeping to power with promises of change.
The political turmoil could delay efforts to thrash out plans due out this month to cut the country's public debt, which stands at nearly 200 per cent of GDP, and a strategy to engineer growth in an ageing society.
But if, as many expect, fiscally conservative Finance Minister Naoto Kan takes the helm, that could raise the chances of bolder steps to rein in debt, including a pledge to consider raising the 5 per cent sales tax.
Hatoyama's Democratic Party of Japan (DPJ) made history with a landslide election win last year, promising to change how Japan is governed after more than 50 years of cosy ties among bureaucrats, companies and politicians under the Liberal Democrats.
But after eight months of indecision and broken promises, the 63-year-old Hatoyama - nicknamed "The Alien" for his quirky comments - bowed to pressure from his party to quit ahead of an election for the upper house of parliament expected in July that it must win to smooth policymaking.
An election loss would not oust the DPJ-led government given its majority in the more powerful lower house, but the ruling bloc needs a majority to keep legislation from being stalled.
With tears in his eyes, Hatoyama told party politicians that he and party secretary-general Ichiro Ozawa would resign.
"In order to revitalise our party, we need to bring back a thoroughly clean Democratic Party. I would like to ask your cooperation," Hatoyama said.
Hatoyama's ratings had nosedived on voter doubts about his leadership, while the old-style image of Ozawa, seen as pulling strings behind the scene, had also eroded public support.
Analysts have tipped Kan as frontrunner to replace Hatoyama, who becomes Japan's fourth straight leader to leave office after a year or less.
A new leader will be chosen on Friday and a new cabinet is likely to be formed on Monday, quicker than many had feared.