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Tokyo - Japan's cabinet on Friday approved a new emergency stimulus package worth $61.3bn to help shore up an economy hit hard by deflation and the impact of a strong yen.
The ¥5.05 trillion plan will be financed by an extra budget, which the government is trying to finalise by the end of this month.
But the fate of the package and the budget will hang on Prime Minister Naoto Kan's ability to muster the support of opposition lawmakers to pass them through parliament, given the ruling party's lack of a clear majority.
The stimulus is the Kan administration's second since it came to power in June and includes job programmes, welfare spending and programmes for small businesses and infrastructure.
Kan came to power pledging to slash spending and work towards cutting the world's biggest industrialised debt running close to 200% of gross domestic product, but Japan's malaise has complicated those ambitions.
The latest stimulus also includes provisions to find new sources of rare earth minerals used in high tech components for cars and computers after Japan said China disrupted shipments following a recent territorial dispute.
If passed, the package is expected to give a boost to Japan's gross domestic product of as much as 0.6% while helping to safeguard jobs.
The measure follows a move by the Bank of Japan on Tuesday to adopt a near zero-rate policy and new pump-priming measures in a bid to spur growth, beat deflation and address the impact of the surging yen on the economy.
"The government is providing its support just as the Bank of Japan has taken monetary easing steps," Japanese Economy Minister Banri Kaieda told reporters.
"Furthermore we will continue to cultivate green shoots that will lead to our growth strategies and nurture their growth," he said of efforts to help growth areas and small business.
The ruling Democratic Party of Japan has aggressively approached opposition lawmakers to muster enough support to pass the budget through the Diet.
The DPJ has a majority in the lower house but needs support of opposition parties in the upper house for swift passage of the budget bill.
Key opposition party New Komeito has agreed to side with the ruling party, after Kan openly courted the Buddhist-backed group, according to media reports.
The government in September approved a ¥915bn stimulus package financed by reserve funds to create around 200 000 jobs and lift the country's GDP by about 0.3%, but that was criticised as not being enough.
An export-led recovery has shown signs of slowing recently. Exports expanded at their slowest pace this year in August, amid falling overseas demand, while consumer prices continue to drop.
The strong yen has hurt Japan's exporters, making their goods more expensive and eroding overseas profits when repatriated.
A strong domestic currency also makes imports cheaper, helping prolong a damaging deflationary cycle where consumers hold off on purchases in the hope of further price drops, clouding future corporate investment.
The dollar hit a 15-year low of ¥82.11 on Thursday.
Japan intervened in currency markets in September and has repeatedly warned it is ready to do so again despite growing worries over a global race to guide currencies lower to help exports.
News of the stimulus plan failed to lift sentiment on Tokyo's benchmark Nikkei index Friday, with shares falling 0.99% on Friday.
