Toyota Motor Corp's Prius hybrid was Japan's best-selling car in June while Honda Motor Co's rival Insight ranked fourth, helping the two hybrid leaders dominate the list of top-selling models.

Sales of the Prius, which was remodeled in mid-May, jumped 258 percent to 22,292 units from the year-earlier month, data from the Japan Automobile Dealers Association showed.

That put the gas-sipping car above Suzuki Motor Corp's WagonR, which is categorised separately with other 660cc minivehicles and had held the overall No.1 position among all segments since January 2008.

June was the third consecutive month in which a gasoline-electric model ranked No.1 among non-minivehicles thanks to a tax incentive introduced in April that benefits hybrids more than other cars.

While the Prius's runaway success has some analysts worried that it would eat into sales of more profitable models such as the Corolla series, it helped Toyota gain market share, albeit only slightly.

Toyota's Japan sales in June fell 11.4 percent from a year earlier, while the overall market dropped 14.5 percent. Corolla sales halved to 6,468 units.

Honda's June sales, including minivehicles, fell 7.1 percent, making it Japan's best performer. Japan's second-biggest carmaker had three models on the top-10 list, excluding minicars, while Toyota had six and Nissan Motor Co had one.

A Honda spokeswoman said the new Insight, which went on sale in February, was attracting showroom traffic and driving sales of other gasoline-engine cars, particularly the Freed minivan.

Honda's perennial best seller, the Fit subcompact, ranked second in June with 13,016 units, down 11.5 percent from the year before. The model, called the Jazz in some markets, was Japan's top seller in the first six months for the second straight year.

(Reporting by Chang-Ran Kim; Editing by Chris Gallagher)