"Given the very severe conditions in the Japanese economy, I have resolved to... compile an emergency economic stimulus package by mid-November," Obuchi told a morning cabinet meeting, government ministers said.

Speaking as Japan reported unemployment at postwar record highs and job cutbacks starting to hit even large firms, the premier said he wanted the measures to be "timely and effective".

Select cabinet ministers are to meet on November 4 and 16 to discuss the package and will try to compile a series of measures by the November 16 meeting.

Obuchi said the package will include a promised extra budget of 10 trillion yen, which is to set aside a special quota of four trillion yen in additional, stimulative public works spending.

"I think there will also be items in addition to thefour trillion yen framework," Economic Planning Agency head Taichi Sakaiya said.

"We must avoid a third consecutive year of negative economic growth and achieve positive growth next fiscal year," Sakaiya told a news conference.

His agency recently lowered the official government forecast for real gross domestic product for the fiscal year to March to minus 1.8 per cent from the previous target of 1.9 per cent growth.

Sakaiya said the package will likely include certain targeted tax breaks, steps to boost home-buying and plans to increase parks and other public spaces, but that details and amounts have yet to be worked out.

One idea being considered by the government and ruling party is a separate one trillion yen dollop of government spending focusing on urban-centre roads and on communications infrastructure, the business daily Nihon Keizai Shimbun reported.

The ministry of international trade and industry is pushing for a direct fiscal spending of 10 trillion yen.

Japan is under pressure fromthe U.S. and other countries to pull the world's second-largest economy out of its prolonged recession to help Asia recover and stave off a global downturn.

Obuchi wants to prepare the measures in time for a Pacific Rim summit in Malaysia that starts from November 17 and will be followed immediately by visits to Japan of U.S. president Bill Clinton and Chinese president Jiang Zemin.

Tuesday's talk of fiscal stimulus marks a shift in focus back from shoring up the rickety banking sector back to trying to kick-start the slumping economy.

The government has set aside 60 trillion yen in public funds for the banks, including 25 trillion yen to pump into banks to boost their capital bases, and has decided to nationalise one major lender, the Long-Term Credit Bank of Japan.

The dire state of Japanese economy was driven home again on Tuesday, when the government reported unemployment stuck at a record high 4.3 per cent in September, with a record low 49 job openings for every 100 job seekers.

Moreover,employment at big companies dipped for the first time in 13 months, prompting a Management and Coordination Agency official to say: "This could be the start of a another phase in which large firms embark on more employee cutbacks."