Japan's prime minister-to-be, Yasuo Fukuda, named his party lieutenants on Monday as he braced for a showdown with a combative opposition amid calls for early elections after a disastrous year for the ruling coalition.

Fukuda, a 71-year-old moderate who favors warmer ties with Asia, was voted leader of the Liberal Democratic Party (LDP) on Sunday after the abrupt resignation of his predecessor, Shinzo Abe, whose administration was crippled by scandals and gaffes.

He will be officially voted in as prime minister on Tuesday given the LDP's huge majority in parliament's lower house.

However, the opposition Democratic Party and its allies hold sway in the upper house, an unusual situation that is likely to plague Fukuda's administration with policy struggles.

The thorniest issue may be Japan's naval support for U.S.-led military operations in Afghanistan, which the LDP wants to continue beyond the November 1 expiry of the current mandate in the face of opposition from the muscle-flexing Democrats.

Fukuda, who beat Aso to the top job, chose conservative former education minister Ibuki Bunmei, a faction leader and loyal ally in the leadership election, for the number two party position, replacing Aso.

ALLIES IN PLACE

He named allies Sadakazu Tanigaki, a doveish former finance minister but also a faction leader, and Toshihiro Nikai to other top LDP posts. Another Fukuda backer was put in charge of election strategy.

Fukuda denied that the appointments had been made on the basis of factional deals, the LDP's traditional way of operating. "I chose the best people for the positions," he told reporters.

Analysts say the party would have difficulty restoring public trust if Fukuda were seen to be putting cronies or factional candidates into key cabinet and party positions.

Tanigaki has advocated raising the consumption tax to help tame Japan's huge public debt, and his appointment is a sign that the issue will be at the centre of the new government's policy.

Some analysts have voiced concern that efforts to help those who have lost out economically in the restructuring of the past few years could result in a further expansion of government debt.

"We must proceed with reforms, but we have to decide how to deal with those who feel a bit left behind," Tanigaki told a news conference.

One problem facing Fukuda is Aso himself, a hawkish former foreign minister some analysts see as having earned recognition for doing better than expected in Sunday's LDP ballot.

He could be named to the cabinet in Tuesday's reshuffle, although many commentators say major personnel changes are unlikely because the government wants to push ahead with legislation after a two-week hiatus. Fukuda told reporters on Monday nothing had been decided.

CRONIES UNWELCOME

Although Fukuda has sought cooperation from the Democratic Party, the opposition group repeated on Sunday its demand for an early general election. Many newspapers echoed the call.

Neither Fukuda nor his predecessor, Abe, have won a mandate in a general election, leaving many voters frustrated that they have had no chance to express their opinions.

"We want to see constructive policy debate with the opposition. Then the new prime minister must go to the people. This is a six-month stay of execution," said the Tokyo Shimbun.

Apart from the naval mission, Fukuda must also restore the ageing population's trust in the pension system, left in tatters after millions of unidentified premium payments were discovered. Opinion polls have shown the electorate is also deeply concerned about the increasing gap between rich and poor.

A pale and drawn Abe apologized to voters and to fellow lawmakers on Monday in his first public appearance since entering hospital on September 13 with a gastro-intestinal disorder exacerbated by stress.

"My resignation came at the beginning of parliament, an extremely important time, and just after my policy speech, which made it the worst possible timing," Abe told a news conference broadcast live on all terrestrial channels.

He apologized for the policy stagnation and congratulated Fukuda, adding that he planned to stay on in parliament.

Japan Afghanistan