Aso told senior ruling party lawmakers on Sunday he planned to dissolve parliament's lower house as early as Tuesday and was set to unveil that plan on Monday, Kyodo news agency reported, adding the likely date for the vote would be Aug. 8.

But many in the ruling bloc are opposed to a move they fear would be political suicide.

Aso's Liberal Democratic Party (LDP) and its junior partner lost their majority in the Tokyo assembly, while the opposition Democratic Party won the most seats in the vote, which is considered a barometer for the national election.

LDP executive Nobuteru Ishihara, asked earlier if the party would fight the general election under Aso, dodged the question.

"That the LDP could not unify including on this point (Aso's leadership) is one reason for this harsh judgment," he said. "If we don't overcome this, we cannot regain the trust of the people."

Ishihara added that while a decision on when to call an election was up to Aso, he felt time was needed to re-unite the party.

NHK public TV said Chief Cabinet Secretary Takeo Kawamura and LDP Secretary General Hiroyuki Hosoda agreed in talks on Sunday the outcome of the Tokyo vote would not affect national politics and Aso would not be blamed for a defeat.

However, Kyodo quoted another unidentified ruling party executive as saying: "This is a great blow against the Aso government."

Media said some younger LDP lawmakers who have expressed dissatisfaction with Aso met at a Tokyo hotel on Sunday night.

INTERNAL STRIFE

The long-ruling LDP has been racked by internal strife of late, with Aso critics openly urging an early party leadership vote to replace him while his allies defend his right to call a general election at a time of his own choosing.

"There will be confusion inside the LDP. People will try to oust Aso and he will try to stay on," said Keio University political science professor Yasunori Sone.

"It is not clear if they can oust him and if they did, would support for the LDP increase? Not much," Sone said. "Chances the LDP could win under a new leader are very small. That has become clearer as a result of this Tokyo election."

A Democratic Party victory in the lower house election would end half a century of nearly unbroken rule by the business-friendly LDP and raise the chances of resolving a deadlock in a divided parliament as Japan tries to recover from its worst recession since World War Two.

Aso's term as LDP leader expires in September and his critics in the party are keen to bring forward the leadership vote to replace him ahead of the general election.

Possible candidates to replace Aso include Minister of Health, Labour and Welfare Yoichi Masuzoe, 60, a former academic and TV commentator seen as competent and hardworking.

But Aso is Japan's third premier to take office since Junichiro Koizumi led the party to a huge win in a 2005 election, so voters might not be impressed with another change at the top.

The Democrats, hoping to intensify pressure on the ruling bloc, are considering submitting a no-confidence motion against Aso in the lower house.

But Japan's biggest opposition party has its own headache.

Democratic Party leader Yukio Hatoyama has apologised for the fact that some people listed as his political donors were dead. But the LDP -- although far from immune to scandals itself -- is pressing for him to appear in parliament over the affair.

Hatoyama took over as party leader in May after his predecessor stepped down to keep a separate fundraising scandal from hurting the party's chances at the polls. (Additional reporting by Yoko Kubota, editing by Mark Trevelyan)

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