Japan’s opposition leader resigned yesterday after a political funding scandal which has given new hope to the seemingly doomed government of the prime minister, Taro Aso.

Ichiro Ozawa announced this afternoon that he was stepping down from the leadership of the Democratic Party of Japan (DPJ), two months after the arrest of his right-hand man on suspicion of improper fundraising. The resignation may turn out to be the salvation of Mr Aso, whose Liberal Democratic Party (LDP) had appeared to be heading towards only its second election defeat in Japan’s post-war history.

“In order to win the general election and bring about a change of government, in the interests of party unity, I have decided to sacrifice myself and resign,” Mr Ozawa told a nationally televised press conference. “This is a big and unrepeatable chance to bring about a change of government. If my presence as party leader jeopardises this unity even slightly, I do not wish to stay on.” Although he has always denied any personal wrongdoing, opinion polls showed that Mr Ozawa had become more of a liability than an asset to the opposition. Both his own ratings, and those of his party, were soaring before the arrest of his aide, Takanori Okubo, on suspicion of illegally accepting donations from a construction company.

In this morning’s newspapers, the DPJ was reported to have a slim lead of 30 per cent over 27 per cent for the LDP. But 71 per cent of voters polled by the Yomiuri Shimbun newspaper said that Mr Ozawa should resign.

Mr Okubo, Mr Ozawa’s chief political secretary, was charged at the end of March with illegally receiving political donations from the Nishimatsu construction company.

Japanese firms are allowed to make donations to political organisations, but not to individual politicians.

The money was channelled through a political group that supports Mr Ozawa - but he insists that he did not know its origin.

The Tokyo Public Prosecutors’ Office raided Mr Ozawa’s offices in Tokyo and his constituency headquarters in Morioka in northern Japan, damaging the standing of his party in a society where an investigation alone causes many people to assume wrongdoing.

Mr Ozawa stands out in Japan, a country lacking in interesting political personalities, for negative as well as positive reasons. A fellow politician famously described his face as that of “a toad who has just licked something terribly bitter”. He began his career in the LDP, which has governed Japan almost uninterrupted since 1955, and is a traditional politician of the old school.

His father was an MP before him and his political mentors were the former prime minister, Kakuei Tanaka, and his henchman, Shin Kanemaru, both of who ended their careers disgraced by corruption scandals. In 1993, he walked out of the LDP, briefly forcing it from power, and was reborn as a reformer, intent on recreating Japan as a modern, independent-minded state, neither beholden to its post-war ally, the United States, nor dominated by conservative bureaucrats.

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