Coalition leaders have fallen into two opposing factions, each seeking to recruit defectors from the largest party in parliament, the Liberal Democratic Party (LDP), which lost power last year for the first time in 38 years. While one camp is mainly left-wing and the other conservative, their differences are as much personal as ideological.
Mr Hosokawa announced on Friday that he would quit after irregularities in his personal finances came to light, but he remains Prime Minister until a successor is approved by parliament. He struggled to hold together the disparate alliance of Socialists, centrists and former LDP conservatives during his eight months in office, and his impending departure has emphasised how little they have in common.
The likelihood of months of political instability was increased yesterday by Mr Hosokawa's decision to convene a government panel to redraw Japan's constituencies. While this was one of the coalition's key proposals, it is expected to rule out an early election. The head of the panel promised it would complete its work by October, but in the meantime Japan will be saddled with a government incapable of stimulating the world's second biggest economy, resolving trade disputes with the US or dealing with urgent foreign policy questions.
The principal factor dividing the coalition is the personality, tactics and political outlook of Ichiro Ozawa, who continues to use the back-room methods he learnt in the LDP. He is co-leader of the Shinseito (Japan Renewal Party) with the Foreign Minister, Tsutomu Hata, whom he and other former LDP conservatives want to install as Mr Hosokawa's successor. But Mr Ozawa and his ideas of Japan playing a greater political and military role in international affairs are anathema to the more liberal wing of the coalition, including the largest party, the Socialists.
The loudest voice against him is that of Masayoshi Takemura, leader of the Sakigake Party and chief cabinet secretary in the coalition government. Mr Takemura, like Mr Ozawa, was once in the LDP, but belonged to a more liberal faction allied with the former prime minister, Toshiki Kaifu. Yesterday he issued a set of political proposals aimed at encouraging LDP defectors to join him. The programme, an explicit rejection of Mr Ozawa's philosophy, was called 'a sheer act of betrayal' by a Shinseito leader.
Shinseito and Mr Hosokawa's Japan New Party were among those boycotting yesterday's round of talks. Instead Mr Ozawa and his colleagues are openly courting an alliance with an LDP bloc led by Michio Watanabe, a former foreign minister, who would probably have to be offered the prime ministership if he were to defect. Such a possibility highlights the frailty of Japanese politics - when he was in office the 70-year-old Mr Watanabe was so enfeebled by an illness that he was unable to carry out his ministerial duties for long periods, but the LDP government would not confirm or deny that he had cancer.