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Amid slumping public support, Kan says it's time to go.
Japanese Prime Minister Naoto Kan is stepping down as the leader of his party, clearing the way for the country's sixth premier in five years.
The ruling Democratic Party will choose a new leader on Monday.
Local media reports on Friday said Kan first told senior party officials of his resignation, before addressing the media in a televised news conference.
I resign as the (party) president effective today. I will leave the post of prime minister once the new leader is decided.
Kan, who has been in office for almost 15 months, has come under harsh criticism for the government's slow response to the earthquake and tsunami that hit Japan in March. He has also been accused of mishandling the ensuing nuclear crisis.
Kan said that "under the severe circumstances, I feel I've done everything that I had to do" — adding that the time had come for Japan to "choose someone respectable" as prime minister.
Kan survived a no-confidence vote in June, when he vowed to quit if parliament passed three key pieces of legislation, which it did on Friday. These were a second budget, a budget financing bill, and legislation promoting the use of renewable energy.
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Media reports said Kan's resignation did not come as a surprise. Japan's new leader will be tasked with resolving the world's worst nuclear crisis since Chernobyl, as well as protecting the country's economy as the yen currency soars.
As many as nine candidates could be in the race to succeed Kan, including the favourite, former foreign minister Seiji Maehara.