Ichiro Ozawa is to resign as the leader of the main opposition Democratic Party of Japan (DPJ) amid a political funding scandal.
Despite denying any wrongdoing, Mr Ozawa said his party needed to remain united if it is to win back public trust and be victorious in any future general election.
At a press conference, he commented: "I have decided to step down from the post of DPJ president to make our party unity stronger so as to realise a regime change."
Among those who it is believed could be the party's next leader are former DPJ chief Katsuya Okada and Naoto Kan.
The issue first came to public attention after it emerged that Mr Ozawa's secretary, Takanori Okubo, violated political funding laws after he received millions of yen in donations from a construction firm.
A new poll has shown that support for Japanese prime minister Taro Aso has risen substantially since the scandal broke. Written by Mike Cotgreave