TOKYO (MNI) - Democratic Party of Japan President Yukio Hatoyama was elected prime minister in a special parliamentary session on Wednesday after the DPJ scored a landslide win in lower house elections last month.

Japan's 93rd prime minister pledged to make sweeping changes to government decision-making by shifting more authority to elected officials from civil servants.

Hatoyama also said that his call for creating an East Asian economic and political bloc "would not alienate the U.S. or the dollar" and that it should be expanded to the Asia-Pacific region to include the United States, Japan's long-time ally.

"We must take policy action first of all to stimulate household spending," he told a news conference. "While the economic outlook remains uncertain, we must make the public feel that they have more money to spend and that they can trust this administration."

He was referring to his party's campaign promises to provide cash allowances for families with children, eliminate highway tolls, and repeal the gasoline surcharge, starting next fiscal year.

"As for securing funds to finance these projects, we are urging every ministry to check for any wasteful spending," he said.

Hatoyama said his administration should be able to save Y7 trillion to finance plans to stimulate consumer spending, at least in the first year, by cutting unnecessary expenditures.

The DPJ hopes to guide the economy onto a sustained growth track in the longer term by improving living conditions and social safety nets. But it remains unclear whether the party will be able to find sources to finance these promises without raising the 5% sales tax for the next four years or increasing government debt issuance.

The government will have to review and stop some of the projects already planned or being implemented in the previous administration's economic stimulus packages but will let the projects continue if they are designed to rejuvenate regional economies, said the prime minister.

Hatoyama said his administration will draw up the state budget for fiscal 2010 by the end of December amid tight schedules.

As for bilateral ties with the United States, he said he wished to "build a relationship of trust" with President Barack Obama. The two leaders are expected to meet during the Group of 20 summit in Pittsburgh next week.

"I believe we have to spend some time in making an overall review of the bilateral security issues," said Hatoyama. "Both countries must become more open to each other. Japan has been too passive in our bilateral relations. We wish to create ties in which Japan will be more assertive."

Earlier on Wednesday, Hatoyama won 327 votes out of 480 in the House of Representatives, easily clearing the simple majority of 241 votes needed to win lower house endorsement.

In the House of Councillors, the DPJ leader gained 124 votes out of 237, above the simple majority of 119.

The DPJ is taking power away from the coalition led by the Liberal Democratic Party, creating a non-LDP government for the first time in 15 years. The LDP has ruled the country since 1955 except for a brief eight-month period through early April 1994.

Hatoyama, a 62-year-old political blueblood, formed his cabinet today by appointing top DPJ party leaders to key cabinet posts. His grandfather Ichiro Hatoyama was prime minister from 1954 to 1956 and the first LDP leader.

The new cabinet was being sworn in by the Emperor on Wednesday evening before holding its first meeting.

Naoto Kan, who has led the party with Hatoyama since its inception in 1996, became state strategy minister, a new cabinet post to be created to concentrate authority on budget and personnel in the prime minister's office.

Kan is also in charge of economic and fiscal policy-making, which was a separate cabinet post in the past.

At the top of the DPJ's campaign platform is its pledge to break away from the government decision-making that has been heavily influenced by career bureaucrats.

Kan, 62, will also serve as deputy prime minister and the DPJ's policy chief. He was health minister in 1996.

Both Hatoyama and Chief Cabinet Secretary Hirofumi Hirano, his top aide, told reporters on Wednesday that Kan will set the overall state budget and instructs the finance minister to draw up detailed plans.

DPJ Secretary-General Katsuya Okada, 56, who was DPJ president from 2004 to 2005, will become foreign minister. He was a Trade Ministry official before becoming a lawmaker in 1990.

Hirohisa Fujii, one of the three senior advisers to the DPJ president, took the finance portfolio. Fujii, 77, was finance minister from 1993 to 1994. He was a Finance Ministry official before becoming a lawmaker in 1977.

Kan, Okada and Fujii joined with Hatoyama in launching the non-LDP administration under Morihiro Hosokawa in August 1993.

Hatoyama defected from the LDP in 1993 and later joined other lawmakers to form the DPJ in 1996, which was expanded to include other parties in 1998.

In 2003 the DPJ merged with a smaller center-right party led by Ichiro Ozawa, a former LDP conservative politician who was behind the grand coalition that ousted the LDP from power in August 1993.

Ozawa has become the DPJ secretary-general, the number two post at the party. The 67-year-old veteran in behind-the-scenes politics survived a political-funding scandal earlier this year and was serving as acting party chief under Hatoyama.

Ozawa played a key role in leading the DPJ to victory in national elections for the House of Councillors in 2007, which has since enabled the opposition camp to control the upper house.

As for the heads of the two smaller parties that are now majority DPJ's coalition partners, Social Democratic Party chief Mizuho Fukushima is charge of consumer affairs and birthrate issues and People's New Party leader Shizuka Kamei will oversee banking sector supervision and postal service reform.

DPJ Vice President Seiji Maehara, who was the DPJ leader briefly from September 2005 to March 2006, became minister of land, infrastructure and transport.

In the Aug. 30 general elections, many voters chose to break away from the legacy of the "no economic growth without structural reform" policy advanced under the administration of Junichiro Koizumi from April 2001 to September 2006.

About four years ago, then prime minister Koizumi led the LDP to a landslide win in general elections by pushing ahead his pet project of privatizing the combined huge postal and financial services, labelling his opponents as those with vested interests.

While Koizumi's reform agenda might have opened up some markets to newcomers, his critics have pointed out that the changes have been too drastic and pro-business in some areas including the deregulation of the use of temporary workers.

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