Japan views the test as an act of aggression and its neighbour as a threat to regional and global stability.
The upgrade, to be effected early next year, gives Japan's generals greater budgetary powers and prestige - a reversal for a military establishment that has kept a low profile since the second world war.
Critics of the education reform bill stressing "love of country" and "public spirit" to boost national pride and discipline, say it smacks of Japan's war era education system.
Resistance to it followed a scandal over rigged public hearings on educational reform and suggestions by Taro Aso, Japan's foreign minister, that the country should debate the issue of acquiring nuclear weapons.
Japan's defence agency is to be a fully-fledged
ministry for the first time since World War II
On Thursday the prime minister was forced to apologise to the nation after admitting he helped rig dozens of town meetings to give the impression of public support for his policies.
Officials had been posing as ordinary members of the public at the meetings to put simple questions to members of his government.
Abe said he and four senior members of his cabinet would work for three months without pay as penance.
The no confidence motion was backed by the Democratic Party of Japan and three other parties, but both houses of parliament are dominated by Abe's ruling Liberal Democratic Party.
Meanwhile, Aso was also targeted with a separate no confidence motion in Japan's lower house of parliament.
He had angered opposition politicians, and some members of his own Liberal Democratic Party, by suggesting Japan should hold debate on building a nuclear arsenal.
Last month, he told members of a parliamentary committee that Japan's pacifist constitution did not prevent it from building nuclear weapons for defensive purposes and that it was capable of building a nuclear weapon but had no plans to do so.
The no confidence motions come amid sliding popularity polls for Abe's government which only came to power in September.
At the time his public support stood at around 70 per cent. But in a poll released this week, conducted before the scandal over the public hearings emerged, that had slumped to 42 per cent.
Voters have expressed worries over Abe's handling of the economy and his approach to foreign policy, particularly in the wake of North Korea's test.