Prime Minister Junichiro Koizumi's ruling coalition retained control of Japan's more powerful legislative chamber but suffered significant losses in general elections Sunday as voters faulted him for not doing enough to reinvigorate Japan's economy.
Koizumi's Liberal Democratic Party lost its single-party majority in the lower house of parliament but managed to hold on to power with the aid of two smaller coalition partners.
The opposition Democratic Party, meanwhile, made strong gains, riding a wave of popular frustration over the slow pace of Koizumi's professed crusade to slash wasteful government spending, revamp debt-laden banks and put the world's second-largest economy back on track after a 13-year slump.
In a better-than-expected performance, the Democratic Party gained at least 40 seats, for a total of 177 in the 480-seat lower house, solidifying its position as a new and formidable rival of the LDP, which has largely dominated Japanese politics since the end of World War II.
The rise of a progressive opposition party appeared to signal a landmark shift in Japanese politics away from a one-party goliath and toward a U.S.-style, two-party system.
"This is one step toward a change in government and a big move toward a two-party system," said Yasunori Sone, a professor at Keio University in Tokyo.
The LDP, which went into the election with 247 seats in the lower house, lost 10 positions and its single-party majority. The three-party governing coalition, however, maintained its majority by winning 275 seats, 12 fewer than before.
The vote marked the first general election since Koizumi came to power in 2001 on a promise to reinvent the stodgy LDP, which despite its name is actually conservative.
Koizumi, 61, initially won celebrity status here for his charisma and flair, but his popularity has flip-flopped in recent months. Last month, he took a gamble by dissolving the lower house and calling early elections in a bid to strengthen his administration, and, he said, to win a stronger mandate to carry out reforms.
But analysts said the results Sunday indicated a hefty dose of public skepticism about Koizumi's ability to enact real change from within the LDP. Many of its senior leaders are seen as opposed to key reforms such as the privatization of the national post office and highway administrations as well as being resistant to cutting the massive pork-barrel spending that critics say is the primary reason Japan has gone from being the world's economic dynamo to its most heavily indebted industrialized nation.
In the weeks and months ahead, Koizumi may find it more difficult to follow through with some of his most controversial policies, including dispatching Japan's Self-Defense Forces to Iraq. The Democratic Party has already come out against the decision, as has the New Komeito Party, a crucial member of Koizumi's coalition.
The Democratic Party attributed its success in the voting to its decision to adopt a campaign platform that committed all its candidates to specific policies and time frames -- an innovation in a country where slogans are typically formulaic requests for voters' "consideration."
"We fought a great battle," said Democratic leader Naoto Kan. "Voters understand what we're talking about."