Japan PM wants Ozawa to stay on for election

One former aide will be charged over the affair on Thursday, media reports say, adding to pressure on Ozawa to resign as Secretary-General of the ruling Democratic Party ahead of a key upper house election expected in July.

Ozawa's skills as a campaign strategist would be valuable in the election, in which the party needs to win a majority to enable it to pass bills smoothly without relying on an awkward coalition with two tiny parties.

Looking at his work up to now, of course, I want him to be in control for the election, Hatoyama told reporters.

But the scandal ensnaring three current and former aides to Ozawa has sapped voter support for the four-month-old administration.

A newspaper survey published on Monday showed that more than three quarters of voters thought Ozawa should step down if former aide Tomohiro Ishikawa were indicted.

Ozawa hinted on Monday he might resign if he came under suspicion of criminal activity himself. But he denied having taken any illegal contributions or bribes.

Some analysts believe the 67-year-old is unlikely to step down for the time being.I don't think he will resign, said political analyst Harumi Arima. By engineering the Democratic Party election victory last year, he thinks he has shown his worth in a different way from opinion polls.

The problem is that anti-Ozawa opinion is rising within the party, he added. People are worried that they might end up with parliamentary gridlock like the Liberal Democratic Party (LDP) did.

The long-ruling LDP struggled for more than two years with an upper house dominated by opposition parties, which delayed much legislation.

Renewed policy paralysis would be particularly damaging for Hatoyama's government at this point as it struggles to balance the need for economic stimulus with massive public debt and structural problems such as the rapidly ageing population.

(Editing by Ron Popeski)