Japanese Finance Minister Yoshihiko Noda emerged on Thursday as a leading candidate to replace the increasingly unpopular Prime Minister Naoto Kan, possibly this month.

But even if 54 year-old Noda, who is the voice of fiscal discipline in the ruling party does get the job, doubts still prevail if he will do any better than Kan in forming an alliance with the opposition to break the political impasse blocking policies to deal with a nuclear disaster and huge public debt, a Reuters report said.

Senior ruling Democratic Party officials wanted to nominate Noda as the candidate in a party leadership election when Kan steps down, possibly later this month, and Noda himself is keen to run, Asahi Shimbun reported.

Kan, in office for one year as Japan's fifth prime minister in as many years, last week survived a no-confidence vote by saying he would step down. But he did not specify when.

Rivals in his own party as well as the opposition want him out this month, clearing the way for a coalition with the main opposition Liberal Democratic Party (LDP).

Who is Noda?

Many view a grand coalition as the best chance to break the impasse in parliament, where the opposition controls the upper house, and secure funding for Japan's biggest rebuilding efforts since the years after World War Two.

Katsuya Okada, the DPJ's secretary-general who reportedly is backing Noda, denied the fact, while Noda declined to comment when asked about it.

The prime minister needs to negotiate with the opposition to pass the debt-issuance bill and shouldn't take a day longer to resign. To do so, would be for the benefit of the country and for disaster management, party elder Kozo Watanabe was quoted by Jiji news agency as saying.

Noda has backed Kan's push for tax reforms, including a sales tax increase, to fund the rising social security costs of an ageing population and rein in the debt, which at twice the $5 trillion economy is the worst among advanced economies.

Markets will like Noda as prime minister. He will try to push through tax hikes and fiscal reforms, said Takeshi Minami, chief economist at Norinchukin Research Institute. But ruling party lawmakers themselves cannot agree on anything. I don't see how ruling and opposition parties could start to work together, even under Noda.

Whoever succeeds Kan will have to cope with the aftermath of the March 11 earthquake and tsunami that ravaged northeast Japan and triggered a radiation crisis at Tokyo Electric's Fukushima nuclear plant and a swelling debt.

In the latest sign when the struggle to bring Japan's economy back on its feet is far from over, trade ministry officials warned that all 54 of the nation's nuclear reactors could be shut by next April, said the report.

That would inflate Japan's energy costs and pose a risk to the hopeful recovery from its second recession in three years.

Senior ruling party officials will be holding a party election in early July on the assumption that Kan would step down by June end, the report stated.

Analysts said Noda would be acceptable to the opposition LDP and that his election could smooth the way to pass bills to issue bonds to fund the budget deficit for this fiscal year and a second extra reconstruction budget. But Noda lacks public appeal.

He's neatly positioned, said Sophia University professor Koichi Nakano. On the other hand, in terms of name recognition with ordinary Japanese, it's close to zero.