"I cannot give up the responsibility to do what needs to be done now. I would like to resolve the nuclear crisis first," Kan told a panel in parliament."I am determined to perform my duty."Pressure from inside his own party mounted after media said ruling party power broker Ichiro Ozawa had hinted he would back the no-confidence motion if Kan refused to quit.
Rivals in the ruling Democratic Party (DPJ) want Kan to quit before a no-confidence vote, clearing the way for a new leader who can form a coalition with the opposition Liberal Democratic Party (LDP) to break the policy logjam in a parliament, where the opposition can block bills in the upper house.
Kan, who took office last June as the fifth premier in as many years, is battling to control the nuclear crisis, figure out how to pay for rebuilding the northeast region hit by the quake and tsunami, and draft tax reforms to pay for rising social security costs.
The government needs to enact a bill enabling the issuance of fresh bonds to fund 44 percent of the $1 trillion budget for the year from April and find ways to pay for rebuilding from the natural disasters, Japan's biggest reconstruction project since after World War Two.
The LDP and its allies need 70 or more of the 305 ruling Democratic Party lower house members to defect to secure passage of the motion, which would force Kan to resign or call a snap lower house election.
Kan's departure could ease the path for a coalition with the LDP, but who would replace him is unclear and whether a new premier would be able to manage such an unwieldy group is in doubt. Many think Kan is too stubborn to quit.
COALITION OR CONFUSION?
Ozawa, a veteran politician known as the "Destroyer" for his record of shaking up politics, told his followers he would push for Kan to step down on his own but hinted he would back the no-confidence motion if that failed, media quoted sources close to him as saying.
"If such efforts are unsuccessful, I will make a decision when I need to," Ozawa was quoted as saying.Some analysts said financial markets would welcome Kan's resignation since a broad coalition with the LDP would make it easier to agree on tough policy decisions such as raising the 5 percent sales tax to pay for ballooning social security costs.
"A formation of a grand coalition will be a big win for Japanese politics after the poor performance following the earthquake," said Takuji Okubo, chief Japan economist at Societe Generale Corporate and Investment Banking.
Others questioned the wisdom of political infighting at a time when Japan faces so many challenges.Data on Tuesday showed the economy was rebounding from the natural disasters, but doubts remain about the outlook for long-term reforms.
"Do they just want to bully Kan? Do they have anyone who can replace him? Do they have an extra budget plan? I don't know why they are trying to create a tense political situation now," said Kyohei Morita, chief economist at Barclays Capital Japan. "From foreign investors' point of view, it is hard to predict what will happen to policies and they will probably avoid getting involved with a risk of the unknown."