John Key

Wellington, June 2 NZPA - Prime Minister John Key says he is disappointed that Japanese Prime Minister Yukio Hatoyama has resigned.

Mr Hatoyama said today he and party secretary-general Ichiro Ozawa would resign after a slide in the polls threatened their party's chances in an election expected next month.

Calls have built up in Mr Hatoyama's Democratic Party for him to step down to revive the party's fortunes ahead of an election for the upper house of parliament expected on July 11 that it must win to smooth policy making.

Mr Key said he was "disappointed on one level" because he had a relationship with, and liked, Mr Hatoyama.

"But obviously what happens domestically in Japan is up to the Japanese people and the Prime Minister but I wish him the best obviously," Mr Key told reporters.

Analysts have tipped outspoken Finance Minister Naoto Kan as the likely successor to Mr Hatoyama, who quits after just eight months on the job.

Political rows, including the recent departure of a tiny leftist party from the ruling coalition, has distracted the government as it thrashes out a plan to cut huge public debt and a strategy to engineer growth despite a fast-ageing population.

Mr Hatoyama becomes the fourth straight Japanese leader to leave office after a year or less in office.