A recent spike in the yen's value has thrust Japan's economy into a crisis[Reuters]

Japan has approved a new $61bn economic stimulus package, the latest in a series of measures to shore up the country's troubled economy.

The new package aims to boost Japan's gross domestic product by 0.6 per cent, create or save up to 500,000 jobs and help small and medium sized businesses.

But the stimulus package, approved by the cabinet on Friday, still has to be submitted to parliament for approval later this month in order to be put into effect.

The cabinet's move comes just days after the country's central bank cut its key interest rate to virtually zero.

Reining the yen

Last month, the Bank of Japan also intervened in the currency market in what appears to have been a fruitless attempt to rein in the strong yen, which hit another 15-year high against the dollar this week.

Exports are down, factory output is falling and Japan continues to struggle with deflation, a situation in which falling prices can drag the overall economy.

The yen's spike in value, meanwhile, erodes overseas earnings for major exporters like Toyota Motor Corp and Canon Inc.

Naoto Kan, the country's prime minister, who came to power just four months ago, has been under heavy political pressure to produce a path to recovery for Japan's economy.

The massive new package follows $11bn in measures that Kan's government unveiled last month.