Japan: New leader faces challenge over US base

Japan's parliament is set to vote Democratic Party leader Yukio Hatoyama in as prime minister in about two weeks, a party official said.

Stanford-educated Hatoyama, the grandson of a former conservative prime minister, is to formally replace the Liberal Democrats' Taro Aso as premier in a special session of parliament to be held in the next few weeks.

Hatoyama will announce his cabinet line-up shortly afterwards, the Mainichi newspaper said.

Hatoyama must also turn his attentions to proving himself on the diplomatic front - an area in which he is virtually untested.

One of his first challenges will be to negotiate with key ally Washington over a plan to move 8,000 US marines off the southern island of Okinawa.

With unemployment at a record high and fears persisting over deflation and public debt, the economy will also dominate the agenda for the Democratic Party after its landslide election victory last weekend.

A new cabinet post to oversee national strategy and the economy will be created, officials said today.