Japanese Foreign Minister Seiji Maehara resigned on Sunday to take responsibility for accepting donations from a foreign national, adding to unpopular Prime Minister Naoto Kan's troubles as he battles to keep his own job.
Maehara, a security hawk who favours close ties with the United States and has criticised China's defence build-up, had been seen as a key contender to succeed Kan if the prime minister bows to pressure to step down himself.
Maehara's resignation deepens the impression of a government in disarray as Kan fights to keep his own Democratic Party (DPJ) from splintering and avoid calling a snap election while trying to enact budget bills in a deeply divided parliament.
The stalemate is blocking the passage of bills needed to implement a $1 trillion budget for the fiscal year from April, and Maehara said he had feared his scandal would only worsen the deadlock if he clung to his post.
"The budget deliberation in the upper house for fiscal 2011/12, an urgent issue, is at a crucial stage," Maehara told a news conference after meeting Kan. "I cannot let parliamentary deliberations get delayed through my political funding problem."
The political impasse is also keeping Kan from getting opposition help on fiscal reforms, including a rise in the 5 percent sales tax, that he argues are vital to fund the costs of a fast-ageing society and curb public debt now twice the size of the $5 trillion economy.