As it prepares to enter a coming election as an underdog, Japan's incumbent government is set to inject ¥200 billion (S$3.1 billion) to try to revive growth in the world's third-largest economy.

Speaking on a Fuji Television programme, Japanese Economy Minister Seiji Maehara revealed the government's plan, without giving details on the source of those funds.

Mr Maehara's announcement came four days after Prime Minister Yoshihiko Noda ordered his Cabinet to draw up economic stimulus measures by next month, with the mass-circulation daily Yomiuri Shimbun reporting that the size of the package could be up to ¥1 trillion.

Mr Maehara said the country needs more monetary easing and policy efforts to encourage growth.

"There are fiscal-easing moves worldwide but, on a monetary basis, Japan is falling short," Mr Maehara said. While "easing is not a panacea", without that and policy moves, "Japan's sovereign credit rating may face a downgrade", he added.

Earlier this month, the government had issued a downgraded assessment of Japan's economy for a third month, the longest streak since the 2009 global recession, as gains in the yen and slowing overseas demand hurt exporters.

Japan's economy grew by 0.3 per cent in the second quarter of the year from the previous three months - down from 1-per-cent growth in the first quarter.

Growth is expected to remain subdued amid continued economic problems in its key markets.

"Considering what the government and the central bank are forecasting, I doubt we can simply stand by and let the economy continue as it is," Finance Minister Koriki Jojima had said last week.

Mr Maehara also hinted that the election - which Mr Noda had said would be held soon - could be held by the end of the year. "It seems to me that 'soon' doesn't mean next year," Mr Maehara said. "Prime Minister Noda is a person who honours his promises."

Mr Noda is Japan's sixth Prime Minister since 2006, and the third for the Democratic Party of Japan (DPJ) since it defeated the Liberal Democratic Party (LDP) in 2009 after the LDP's half-century domination of the government.

He has been unable to reverse more than a decade of deflation and his biggest legislative achievement was a sales tax increase that risks damping consumption.

Mr Noda's approval rating was 34 per cent in a Yomiuri newspaper poll published on Oct 3, compared with 65 per cent when he took office 13 months ago. Support for his DPJ was at 18 per cent, while that of the LDP was 28 per cent. Almost 45 per cent had no party preference.

Mr Noda is not legally obliged to dissolve the Lower House of Parliament and call an election until August next year.

TODAY