The leader of ruling coalition partner the People's New party said Sunday Prime Minister Naoto Kan of Japan will step down in August.

Last week Kan survived a no-confidence motion of the opposition after promising to relinquish power but without specifying a date. He later hinted he wanted to stay until next year, angering his opponents.

Kan, who was appointed Prime Minister and leader of the Democratic Party of Japan (DPJ) in June 2010, said he wanted first to resolve the world's worst nuclear crisis in 25 years before stepping down.

"I cannot give up the responsibility to do what needs to be done now. I would like to resolve the nuclear crisis first. I am determined to perform my duty," Kan told a panel in parliament.

"His real thought is to get his work done by the end of August," said Shizuka Kamei, leader of the People's New Party, on TV Asahi.

In August the government is expected to submit its second supplementary budget to parliament aimed to fund the government's reconstruction effort after the March 11 earthquake and tsunami disaster which badly crippled the Fukushima Daiichi nuclear power plant.

Takuji Okubo, chief Japanese economist said that if Kan is not stepping down immediately, the discussion on a large-scale supplementary budget won't make progress until July when the grand coalition is going to happen.

"From both Japanese and foreign investors' point of view, now is not the time for political turmoil. Japan has various issues it needs to address swiftly - not only reconstruction. but also an energy policy which requires political initiative," said Yasuo Yamamoto, senior economist at the Mizuho Research Institute.

Other Japanese economists and leaders, however said it was good that Kan would not stepped down immediately so as to enable a smooth transition of power.