(Corrects paragraph 9 and subhead reference to Toyota progress to strong from some)

TOYOTA CITY, Japan - The Obama administration believes Toyota Motor Corp <7203.T> is paying closer attention to safety concerns, but Washington continues to investigate the carmaker and will not rule out a new fine, the top U.S. transport official said on Monday.

Transportation Secretary Ray LaHood is encouraged by the automaker's recent safety steps and will be watching carefully, he said at a news conference and in a separate conference call with reporters following a meeting with Toyota Chief Executive Akio Toyoda in Toyota City.

We're going to continue to pay very close attention to our safety responsibility and pay close attention to make sure that Toyota is holding up its safety criteria and making sure that their cars are safe, LaHood said.

LaHood said he had a frank discussion with Toyoda at Toyota headquarters about the crisis that shook confidence in the company's popular brands this year.

The automaker recalled more than 6.5 million Toyota and Lexus vehicles in the United States -- 8 million worldwide -- in 2009 and this year, mainly for complaints about unintended acceleration.

U.S. regulators are investigating allegations that the problems are associated with up to three dozen crash deaths over the past decade.

Heavy scrutiny by U.S. regulators and lawmakers prompted Toyota to establish a quality control panel in North America to boost customer satisfaction, streamline the flow of information to and from headquarters, and expedite recall decisions.

What I told Mr. Toyoda today (is), these measures are important measures but I use the American colloquialism: The proof is in the pudding, LaHood said, adding that time will tell whether Toyota's efforts will bear fruit.

Appearing with LaHood, Toyoda told reporters that he believes the company is making strong progress in delivering on its promises.

Today, Secretary LaHood and officials of the Department of Transportation have witnessed our commitment to quality with their own eyes through a tour of our facilities, Toyoda said.

LaHood said he expected Toyoda to visit the United States for a second time this year in September or October to meet with U.S. lawmakers and safety regulators. Toyoda testified before Congress in February at the height of the company's troubles.

U.S.-listed shares of Toyota were up 2.4 percent at $76.69 in morning New York Stock Exchange trading.

INVESTIGATION CONTINUES

The U.S. National Highway Traffic Safety Administration continues to investigate whether Toyota violated U.S. law by delaying a 2009 recall of all-weather floormats that could jam the gas pedal and cause uncommanded acceleration.

LaHood said regulators were poring over 500,000 pages of documents and would not know what, if any, action may be needed for a couple of months.

He did not rule out a fine, which would be the second against Toyota.

We will make whatever recommendations or make whatever decisions we have to make based on what is in those documents, LaHood said.

If there are car manufacturers that violate the laws, then we will take appropriate action, said LaHood, who earlier this year pressed hard for recalls and characterized Toyota as a little safety deaf.

Toyota agreed to pay a record $16.4 million U.S. fine last month for delaying a January recall over defective accelerator pedals that would not spring back as designed.

Toyota denied violating regulations in the sticky pedal recall and said it was paying the penalty to avoid a protracted and expensive dispute with U.S. officials.

U.S. regulators, assisted by space agency and other scientific experts, are also examining whether electronic systems in Toyota and Lexus throttles have anything to do with unintended acceleration.

The automaker and regulators were sharply criticized by Congress and safety advocates for their handling of related complaints over the years.

Most recently, Toyota has recalled the Lexus GS 460 luxury sport utility for problems with the electronic stability control system.

Toyoda said LaHood had praised the company for its prompt handling of that matter.

A proposed change in U.S. law prompted by the Toyota saga would give the National Highway Traffic Safety Administration new powers to more easily force recalls. Another proposal would remove the $16.4 million cap on fines.

(Additional reporting by John Crawley in Washington; Editing by Michael Watson and Lisa Von Ahn)

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