Japan's premier-designate Yoshihiko Noda on Monday vowed a safe pair of hands in rebuilding the country from its tsunami-nuclear disasters after he was elected the ruling party chief.

The low-key, business-friendly finance minister is set to be confirmed as prime minister on Tuesday by parliament, replacing the unpopular Naoto Kan to become the debt-laden nation's sixth new leader in five years.

Known as a fiscal hawk, 54-year-old Noda has described himself as an ordinary man and pledged a moderate "middle-of-the-road" politics, while also promising to unite his divided Democratic Party of Japan (DPJ).

Likening himself to a modest marine creature rather than a charismatic political star, Noda said in a final campaign appeal to DPJ lawmakers on Monday: "I am a loach. I can't be a goldfish."

His election may cause ripples among Japan's neighbours following his recent comments on the country's World War II history.

Noda sparked a strong response from South Korea weeks ago when he said on the anniversary of Japan's 1945 surrender that Class-A war criminals convicted by an Allied tribunal were in fact not war criminals.

In Japan, the focus is on the pressing tasks of rebuilding after the March 11 calamity, ending the Fukushima nuclear crisis, revitalising a stagnant economy and addressing the industrialised world's largest public debt.

The country is still struggling to resolve the Fukushima disaster after reactor meltdowns forced more than 80,000 people from their homes and contaminated wide stretches of farmland, causing national food scares.

On the economic front, years of pump-priming have left Japan saddled with a public debt that is more than twice the size of the economy and set to balloon further as a fast-ageing population increases welfare costs.

Last week, ratings agency Moody's cut Japan's credit rating, citing the huge public debt and the country's revolving-door politics that have delayed essential reforms needed to alleviate it.

Noda has advocated raising taxes rather than borrowing more money to pay for quake reconstruction and to bring down the debt, a position that has made him the favourite of financial markets, which ticked up Monday.

Noda on Monday noted that the debt and economic woes of the United States and Europe pose a threat for Japan, which has been overtaken as the world's second-biggest economy by China.

"In this global current, the question is who will be able to navigate this ship called Japan without losing its course, and say what Japan should say in the arena of international negotiations," he told the DPJ lawmakers.

On the question of nuclear power, which his predecessor Kan wanted to phase out following the Fukushima disaster, Noda has said that currently shut-down reactors should be restarted once they are deemed safe.

Noda emerged as the winner of the five-way contest within the centre-left DPJ when he gained 215 votes in the second-round ballot, against 177 for the trade and industry minister, Banri Kaieda.

The contest was fought out mainly between factions rather than based on major policy differences or the candidates' popular support. Kaieda came first in the initial ballot, but losing candidates then lent their support to Noda.

The DPJ, which took power two years ago in a landslide election victory, ousting the long ruling conservatives, is deeply split between supporters and enemies of scandal-tainted Ichiro Ozawa, dubbed Japan's "Shadow Shogun".

Ozawa commands the loyalty of about 130 lawmakers, many of whom he coached in electioneering and helped get elected.

The defeat of the Ozawa-backed candidate, Kaieda, was a setback for the powerbroker who last year lost a contest against Kan and has since been stripped of his party membership after being indicted over a funding scandal.

The contest, in which the DPJ's general membership could not vote, came amid public disenchantment over the government's response to the March 11 disasters.

Kan on Friday confirmed his resignation after less than 15 turbulent months in office, after his approval rating plummeted from a high of 65 percent to just 15 percent amid criticism of his handling of the disaster aftermath.

Hidekazu Kawai, emeritus professor of politics at Gakushuin University, said that, given Ozawa's low popularity in Japan, "DPJ party members and also public opinion both acted to remove the influence of Ozawa in the end".

"One of the positive aspects of the DPJ is that there are many young politicians," Kawai said. "We can expect Noda to show consistent and stable leadership in uniting the DPJ."