A parliamentary vote confirmed Kan as successor to Yukio Hatoyama, who tearfully resigned as prime minister Wednesday, citing the row over the base on Japan's Okinawa island and financing scandals that had sullied his government.

Kan, a former leftist activist, is Japan's fifth premier in four years, and the first in over a decade not to hail from a political dynasty.

The 63-year-old previously served as deputy premier in Hatoyama's centre-left government, which came to power last year in a groundbreaking election ending decades of conservative rule.

"My first job is to rebuild the country, and to create a party in which all members can stand up together and say with confidence, 'We can do it!'" a smiling Kan said after his party earlier installed him as its new leader.

Kan vowed to revitalise Asia's biggest economy, which has been in the doldrums since an investment bubble burst in the early 1990s.

"For the past 20 years, the Japanese economy has been at a standstill," said Kan. "Growth has stopped. Young people can't find jobs. This is not a natural phenomenon. It resulted from policy mistakes.

"I believe we can achieve a strong economy, strong finances and strong social welfare all at the same time," he said, pledging to reduce Japan's huge public debt, which is nearing 200 percent of gross domestic product.

Signalling closer engagement with East Asia, he said later: "Japan is located in a very good region geopolitically. Asia has seen great development.

"Japan is part of it, potentially in a position to have a complementary relationship with developing China, India and Vietnam."

On foreign policy, Kan also pointed to the threat posed by communist North Korea, where the isolated and nuclear-armed regime has been blamed for the sinking of a South Korean warship in March.

"Japan has a lot of problems, including the North Korean issue," said Kan, stressing that US-Japanese ties remain the "cornerstone" of foreign policy after Hatoyama badly strained relations with Washington.

Hatoyama's support plummeted after he backtracked on an election promise to move the unpopular US base off Okinawa, enraging locals as well as the pacifist Social Democrats, who quit his coalition.

Kan said he would honour an agreement reconfirmed last week to relocate the US Marine Corps Air Station Futenma within Okinawa.

"The Japan-US accord was reached between a government and a government, between a country and a country," he said. "Since the accord was reached under the Hatoyama administration, it is our duty to acknowledge it firmly. The accord also calls for a reduction in Okinawa's burden. Firm action is needed."

He also said he would maintain Japan's goal of cutting greenhouse gas emissions by 25 percent from 1990 levels by 2020.

It was not immediately clear whether Kan would stick with the expected July 11 date of upper house elections or delay the vote, in which his coalition will fight to keep its wafer-thin majority.

Kan faces an uphill battle to win back voters after the government's approval ratings under Hatoyama slumped below 20 percent.

He said he would select ministers over the weekend and launch his cabinet Tuesday.

Kan, the son of a factory manager and a graduate of applied sciences, campaigned in the 1970s for pacifist and environmental causes and entered parliament with a leftist party in 1980.

He achieved popularity in the mid-1990s when as health minister he admitted government culpability in a scandal over HIV-tainted blood products.

When the Democratic Party of Japan (DPJ) took power last September he headed a new strategy bureau tasked with wresting power from Japan's entrenched and secretive state bureaucracy.

In January Kan, although not a trained economist, took over as finance minister. He advocated a weaker yen and badgered the central bank to do more to help Japan recover from its worst post-war recession.

China sent "heartfelt congratulations," saying Kan had stressed the importance of ties with Beijing. German Chancellor Angela Merkel said she expected to build on decades of "close and successful cooperation" with Japan.

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