|Incumbent leader Naoto Kan, left, won a tough fight against rival Ichiro Ozawa, right, for the top post [AFP]
Naoto Kan, the incumbent Japanese prime minister, has won a party leadership vote which could have brought in the country's third prime minister in a year, and the sixth in three years.
Japan's lower house of parliament gave Kan a surprisingly large margin of victory in the poll on Tuesday, taking 721 votes against his challenger and popular veteran legislator Ichiro Ozawa's 491.
Kan remains head of the ruling Democratic Party of Japan (DPJ) and prime minister because of the party's parliamentary majority.
Al Jazeera's Tony Birtley, in the capital Tokyo, said: "It was an overwhelming victory, the grassroots of the party voted overwhelming for Kan.
"Everyone's hoping the scars in the party will heal and the party will move on. People want stability now, new initiative and Japan moving forward."
Media reports had predicted that the outcome would be too close to predict, with as many as 30 party members being undecided ahead of Tuesday afternoon's vote. But the DPJ voted for stability over change.
The vote came as Japan battles a strong currency, a weak economy and a bulging public debt.
Kan, 63, who took office three months ago, and rival Ozawa, 68, who has been in parliament for 40 years, have clashed over economic policies.
Kan has vowed to cap spending and debt issuance to rein in a public debt already twice the size of Japan's $5 trillion economy, the second largest in the world after the US.
He also wants to debate raising the five per cent sales tax to fund growing social welfare costs of a fast-ageing population.
Ozawa promised to cut waste to fund party campaign promises to give consumers more cash, pry control over policy away from bureaucrats to re-prioritise the budget, and consider more borrowing to fund stimulus if the economy stumbles.
He pledged steps to curb the yen's rise to 15-year highs, including solo intervention, and could well pressure Japan's central bank to buy government bonds to fund his spending plans.
Kan's team has repeatedly expressed concern about the yen's climb but so far has refrained from stepping into the market.
The DPJ last year ousted the long-dominant Liberal Democratic Party (LDP), ending more than 50 years of nearly non-stop rule by the conservative party.
But it floundered under Kan's predecessor Yukio Hatoyama and the DPJ-led ruling bloc lost its upper house majority in a July election after Kan floated the sales tax rise.
Ozawa has in the past vowed to work with Kan if he wins, but some analysts say the leadership battle could split the party and result in a possible realignment of party allegiances.