The cabinet sent to parliament an 88.55 trillion yen (980 billion dollar) budget for the year from April 2009 that covers tax cuts and cash rebates but slashes foreign aid and worsens an already ballooning debt.

"We need to take unprecedented measures when in an extraordinary economic situation," Aso told a news conference soon after his cabinet approved the budget.

"Japan cannot evade this tsunami of world recession. But by taking bold measures, we aim to be the world's first to come out of recession," he said.

He warned "conditions next year around the world to drop rapidly".

Japan's economy, the world's second largest, has contracted for two straight quarters as demand overseas dries up for its cars, electronics and other exports.

In only three months in office, Aso's own approval rating has plunged alongside the economy, with recent polls showing that the opposition is more popular than his long-dominant Liberal Democratic Party.

Aso demanded that the opposition -- which controls parliament's less powerful upper house -- act quickly on the budget.

He ruled out calling an immediate election, which must take place by September.

"Now that we are in the midst of a once-in-a-century crisis, we are not in a position to talk about such things. I think it's impossible," Aso said.

But shortly after his remarks, a ranking member of his party sided with the opposition in urging the premier to call elections.

In a visible show of defiance, Yoshimi Watanabe, the former minister for administrative reforms, stood from his seat in the lower house to vote for the opposition-sponsored resolution.

"Only elections can break the deadlock," Watanabe, son of a former deputy prime minister, told reporters afterwards.

The measure, however, was rejected by the ruling bloc which controls the powerful house.

Aso, whose passion for fine dining and upscale bars has come under fire in light of the recession, offered an unusually vigorous explanation of his budget.

Breaking tradition with Japanese prime ministers who speak formally from a lectern, Aso took a microphone in hand and used a pointer to explain his government's economic proposals.

The government distributed colourful documents outlining the measures, including cartoons of happy people enjoying tax cuts and cash payouts.

The general-account budget for fiscal 2009 comes to an all-time high of 88.55 trillion yen, up 6.6 percent from the initial fiscal 2008 budget.

Issuance of government bonds soars 31.3 percent from last year to 33.29 trillion yen to make up for an expected drop in tax revenue. Japan already has the biggest public debt of any major economy as a percentage of gross domestic product.

The spending increase reflects an emergency economic package that Aso announced earlier this month which includes tax cuts for homeowners, loans for unemployed workers and public cash injections to banks.

Aso plans to distribute two trillion yen back to households in cash stipends, worth 64,000 yen (700 dollars) for a family of working-age parents and two children.

Fujio Mitarai, head of Japan's main business lobby Nippon Keidanren, gave his support to the budget, saying "it should help the economy".

"It's not meant to maintain the status quo but rather is productive and future-looking," Mitarai told reporters.

Aso has also urged business leaders to rethink their thousands of job cuts, saying they would only hurt the economy further.

Isuzu Motors Ltd. on Wednesday partly reversed plans to dismiss 1,400 non-regular workers, saying some 550 temporary workers at two domestic factories could stay until their contracts expired.

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