Japan’s new prime minister Yasuo Fukuda today used his inaugural public statement to make an unprecedented admission of weakness, warning that his ruling Liberal Democratic Party could lose control of government “if it makes a single wrong step”.

Just hours after he was officially voted-in as prime minister, Mr Fukuda hinted at the fragile political position of his government as he unveiled what many see as a last-ditch bid to regain public trust in politics and the competence of the LDP.

His comments came as the leader of the newly invigorated opposition Democratic Party of Japan (DPJ), Ichiro Ozawa, renewed his call for a snap general election that could see the LDP losing its majority in the Lower House of Japan’s parliament. In what was seen as a further admission of the LDP’s tenuous grip on power, Mr Fukuda said that he was open to policy discussions with the DPJ.

Much of the LDP’s recent woes arise from the heavy losses it sustained at the House of Councillors elections earlier in the summer - losses that left it without a majority in the upper chamber of Japan’s parliament and left Mr Fukuda’s predecessor, Shinzo Abe, in a precarious position.

The surprise defeat at the Upper House elections was chiefly due to the perceived failures of Mr Abe, who was forced to watch helplessly as successive cabinet ministers resigned in scandal and his reform agenda was undermined by the conservative ranks of his own party.

Selected by the increasingly desperate LDP party machine as a safe pair of hands capable of washing away the memory of Mr Abe, Mr Fukuda today named a cabinet with few changes from his predecessor’s. I call this “the cabinet with its back against the wall”, the 71-year old prime minister told reporters at his first press conference late on Tuesday evening, “if it makes a single wrong step, the LDP could lose its power.”

The key post of chief cabinet secretary went to Nobutaka Machimura, a former foreign minister under prime minister Junichiro Koizumi.

Fearing that Mr Fukuda may allow the reform agenda of Mr Koizumi to disappear altogether, business leaders today joined in warning the new government against any return to the pork barrel politics of the “old” LDP.

The LDP has held an almost unbroken stranglehold on power in Japan for more than five decades but the dismal leadership of Mr Abe, who resigned two weeks ago, has eroded the ruling party’s internal confidence. The party itself, say MPs, has become a seething pit of distrust and division.

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