Japan's unpopular Prime Minister Naoto Kan on Friday rejected growing calls from within and without his ruling party to resign to break a political stalemate.
A senior member of the ruling Democratic Party of Japan (DPJ) has asked an opposition party for cooperation in passing budget bills through parliament in exchange for replacing Kan as Prime minister, press reports said.
Kan, in power for less than a year, called the reported proposal an old-style political gambit.
"I have no intention in the least bit to return to such old politics," he told reporters at his official residence.
"What is most important for the people at the moment is the passage of the state budget at a time when the economy is on the verge of recovery," he added.
Asked about the possibility of dissolving the lower house for an early general election, he said: "I will take action by considering what is most important for the people."
Kan, whose approval rating has plunged to about 20 percent, has struggled to tackle entrenched economic and social woes since taking office in June last year.
On Thursday, 16 DPJ lawmakers loyal to Kan's internal party rival and powerbroker Ichiro Ozawa said they might not support Kan's centre-left government in crucial parliamentary votes.
They said they were protesting Kan's lack of leadership and failure to meet the pledges the DPJ made when it swept to power in mid-2009, ending half a century of conservative rule, to give top priority to people's livelihoods.
If the rebels refuse to vote with Kan's party it could spell doom for the government, which already lacks the two-thirds lower house majority necessary to push through bills which are rejected by the upper house.
The opposition, led by the conservative Liberal Democratic Party, controls the upper house and has threatened to block crucial bills for the state budget for the next fiscal year, which starts on April 1.