The recommendation, which comes after 10 months of deliberation, makes it likely that three-year old Princess Aiko will one day rule the world's oldest hereditary monarchy.
The panel was set up by Prime Minister Junichiro Koizumi to resolve the succession crisis facing the imperial family, which has not produced a male baby since 1965. The crisis had been brewing for years before coming to a head in 2004 when Aiko's mother, Princess Masako, disappeared from public view for almost a year.
Many believe the princess, who was later diagnosed as suffering from a "stress-related disorder," crumbled under the pressure of trying to produce a male heir to the imperial family, which claims an unbroken line of 2,600 years. The panel's findings acknowledge, in effect, that the 42-year-old princess, who previously suffered a miscarriage, is unlikely to have another child.
Emperor Akihito, her father-in-law, has three children including her husband, Prince Naruhito. But the other brother, Prince Akishino, has no sons, and their sister, Princess Sayako, is to abandon the imperial household and marry a commoner.
"The number of eligible imperial heirs is so few in reality," said the panel's leader Hiroyuki Yoshikawa, who also accepted that there was "little possibility" of widening the imperial gene pool by accepting former family members back into the fold. The once sprawling imperial family tree - and its system of concubines - was pruned by the post-war US occupation, which was determined to strip the institution of much of its power.
The panel's recommendations, which were leaked earlier this year, had been expected. It is thought that Mr Koizumi, who has said the nation would "welcome a female emperor", avoided appointing conservatives to the panel who might oppose him.
The savvy prime minister, who announced yesterday that the government was drawing up legislation to revise the 1947 Imperial House Law, knows a popular cause when he sees one: the Tokyo Shimbun newspaper reported last week that 84 per cent of Japanese supported changing the law, which prevents females from succeeding to the throne. All the opposition parties also favour change.
Japan has had eight empresses since the eighth century, including the last, Empress Go-Sakuramachi who abdicated in 1771, but all were temporarily warming the throne until a male heir could be found, and none had children who succeeded them.
Opposition to an empress is strongest among traditionalists who believe they are protecting the family's unbroken bloodline, particularly among conservative followers of the Japanese religion, Shinto, in the imperial household, who once revered the emperor as a god.
Although Princess Aiko appears an unlikely threat to two millennia of tradition, her ascension is opposed by conservatives, who still preside over dozens of male-only rituals which place the emperor at the centre of the universe.
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