Opposition forces would also face a difficult decision – whether to maintain their anti-LDP stance or enter a coalition with the ruling camp to demonstrate their policymaking ability – a choice that could further unsettle Japan's political landscape.

If political instability continues, Japan could return to a "revolving-door" government with prime ministers changing about once a year, sparking concerns that frequent turnover could hurt its ability to pursue consistent diplomacy and stable economic policy.

Ishiba's move on Sunday came a day before the LDP, with its aging support base, planned to decide whether to hold a snap presidential race, amid mounting calls for him to step down over the party's heavy loss in the July 20 House of Councillors election.

"I still have work to accomplish, but I made the tough choice to step down," Ishiba, once regarded as a reform-minded outsider within the LDP, said at a press conference, adding he was to blame for the dismal outcome in the upper house race.

The ruling coalition, led by the LDP under Ishiba, who won a leadership race in September 2024 and became prime minister the following month, has already lost its majority in the more powerful House of Representatives since late last year.

Since before Ishiba's inauguration, the LDP has been hit hard by a slush funds scandal, in which income from some fundraising events was underreported, as well as revelations about its suspicious ties to the controversial religious group, the Unification Church.

The LDP's election review report released more than a month after the upper house race, pointed to the political funds scandal as the main cause of the party's setback, without holding Ishiba personally responsible.

While approval ratings for his Cabinet rebounded, Ishiba said his resignation is meant to avoid a "decisive split" within the party over whether to hold an early leadership race. The LDP has held power almost continuously since 1955.

The LDP presidential race was once a step that effectively determined Japan's prime minister, but results in the past two national elections show that an LDP chief is not always guaranteed the premiership, which is decided by a parliamentary majority vote.

Among opposition parties, the Democratic Party for the People and the conservative Sanseito party gained strength in the upper house election on the back of growing popularity among younger voters through social media.

The left-leaning Constitutional Democratic Party of Japan, led by former Prime Minister Yoshihiko Noda, remains the largest opposition force in both houses of parliament. In the 465-member lower house, the LDP holds nearly 200 seats and the CDPJ almost 150.

"The main scenario is that the LDP, still the largest force, will forge a coalition with other parties," said Hitoshi Komiya, a professor at Aoyama Gakuin University.

An attempt by opposition parties to form a coalition to field a joint prime ministerial candidate is "unlikely to go well" and "unrealistic," said Komiya, an expert on Japanese political history.

Komiya, however, added the opposition parties may be wary of joining the government since it could betray voters who support their stance against the ruling camp, but it could also be a chance to show their ability to "run the administration."

Another focal point is whether a new LDP leader would dissolve the lower house for a general election in a bid to regain a majority for the current coalition with the Komeito party, if the party head succeeds in becoming premier.

But LDP supporters are apparently unenthusiastic about such a political move, with the latest Kyodo News survey showing that 70.4 percent of respondents who back the party said they found no need for an early lower house election.

"After all, the LDP has no choice but to expand its coalition," said Yuri Kono, a political science professor at Hosei University, adding the situation is expected to continue with the LDP "too weak as a ruling party yet too strong as an opposition party".