Okada said he wanted the next prime minister to tackle the DPJ's problems and exercise strong party leadership, saying: "Provided these two points are met, I told him, I support Mr Kan."
Support has built quickly for Kan, a former grassroots civic activist who achieved popularity in the mid-1990s when as health minister he admitted government culpability in a scandal over HIV-tainted blood products.
Kan took over as finance minister in January and has since advocated a weak yen and pushed for spending cuts and tax increases to contain Japan's swelling public debt, which is nearing 200 per cent of GDP.
The only other declared candidate was Shinji Tarutoko, a little-known politician without a ministerial rank, and chairman of the party's environmental committee in the lower house.
Hatoyama quit on Wednesday over his broken campaign promise to move a US military base off the southern island of Okinawa.
His approval ratings had fallen sharply after he backtracked last week on a pledge to move the US Futenma Marine Air Station off Okinawa.
The decision to keep the unpopular base on the island, despite strong local opposition, caused a split in his three-party coalition, with the small Social Democrat party quitting the government on Sunday.
Hatoyama had also faced growing pressure from within his own DPJ for him to step down to revive the party's fortunes in the run-up to an election for the upper house of parliament expected on July 11.
The Democrats swept to power in August after a landslide election win for parliament's more powerful lower house, ousting the conservative Liberal Democratic party (LDP) after more than 50 years of almost continuous rule.
But doubts over Hatoyama's perceived indecisiveness have eroded the government's approval ratings, with one poll showing support at just 17 per cent.
Hatoyama was the fourth Japanese prime minister to resign in four years.