In a meeting of executives, the Liberal Democratic Party (LDP) and coalition partner Komeito also agreed to offer 100,000 yen in cash payouts to low-income households hit hard by the coronavirus pandemic, Jiji reported.

Japanese Prime Minister Fumio Kishida told party executives earlier on Tuesday that he wanted to compile the stimulus package on Nov. 19 and an extra budget to fund the spending by the end of this month, according to Kyodo news agency.

Komeito called for blanket 100,000 yen cash payouts to children aged 18 and younger as part of the package, while LDP officials wanted to set an income cap.

As a compromise, the two parties agreed to offer half the sum in the form of a voucher. The other half would be paid in cash, Jiji said, though the two parties remained undecided on whether to set an annual income limit for those who were eligible.

Meanwhile on Monday, Kishida vowed to establish an $88 billion university fund to promote Japan as a science and technology nation as part of a growth strategy needed to distribute wealth to the wider public.

Some of the growth initiatives, like the university fund, will likely be featured in the planned stimulus package, worth several tens of trillion yen, that Kishida has pledged to compile around the middle of this month, government officials said.

"We want to put new capitalism into gear by carrying out what needs to be tackled right away with an economic package," Kishida said at the end of a “new capitalism” panel meeting.

"To promote Japan as a science and technology nation, we will realize a 10-trillion-yen university fund by this fiscal year-end. We will develop clean energy by backing domestic production of storage batteries and promoting electric vehicles."

The panel, in its recommendations, called for the establishment of a separate fund aimed at backing research and development over multiple years on digital transformation and green innovation as pillars of Japan's new growth strategy.

The panel's proposals for Japan's growth strategy, which was presented at its meeting on Monday, made no mention of the scale of the stimulus and extra budget to fund it.

The proposals will lay the groundwork for Kishida's economic policy mix of pro-growth policies of former premier Shinzo Abe's "Abenomics" stimulus steps and will more directly shift wealth from companies to households.

For wealth distribution, the panel urged revamping the tax system in a way that would make it favorable for companies, thus helping to raise pay for employees, through greater tax credit and other measures.

The proposals come as Kishida's government is considering an economic stimulus package worth more than 30 trillion yen to ease the pain from the COVID-19 pandemic, a plan which would require the issuing of new bonds, Kyodo news reported.

Kishida has also pledged to put economic security among his policy priorities, including boosting the domestic output of semiconductors.

To this end, the panel called for the creation of a strong supply chain and the construction of domestic chip factories with state support over the coming years.

The government is likely to subsidize up to half of Taiwan's Taiwan Semiconductor Manufacturing Company Ltd.'s estimated 1-trillion-yen investment for building a chip plant in Kumamoto, southern Japan, the Nikkei has reported.