Japanese media say Prime Minister Taro Aso has decided to call a snap elections for August 30.
Following talks Monday with the ruling Liberal Democratic Party, officials said Mr. Aso also decided to dissolve the lower house of parliament on July 21 in preparation for the general election.
The move comes after the LDP and its coalition partner the New Komeito Party failed to keep their majority in the Tokyo Metropolitan Assembly in an election Sunday. The LDP won just 38 seats in the 127-member assembly, while the opposition Democratic Party of Japan, led by Yukio Hatoyama, became the assembly's largest party, winning 54 seats.
The LDP's defeat in the huge Tokyo metropolitan area could intensify moves to oust the embattled prime minister before the end of his term.
The Tokyo election is considered a bellwether for the upcoming general elections. The LDP lost its majority in the upper house in 2007. Opinion polls suggest it could lose the majority in the lower house later this year.
Mr. Aso took office last September as Japan's third prime minister since 2006. Junichiro Koizumi, who led the LDP to a huge election victory in 2005, stepped down in 2006, according to the party rules.
Mr. Aso's term as head of the LDP ends in September. He has been hounded by low approval ratings for the way he handled the economic crisis and for his controversial statements.