In a hastily arranged evening news conference Fukuda said he was stepping down to avoid a "political vacuum" as the deeply troubled government heads into a special parliamentary session later in the month.

The 72-year-old leader made the announcement just days after unveiling US$18 billion in fresh spending to shore up the flagging economy. Inflation has spiked to its highest in nearly 11 years, hurting consumer spending.

Fukuda has suffered from chronically low approval ratings as he presided over a parliament split between the ruling party and the opposition. One poll published on September 1 showed his approval rating at 29 percent, down sharply over the past month.

His predecessor Shinzo Abe also resigned in September 2007 for health reasons after a year in office.