Early exit polls indicate that Japan's dominant political group, the Liberal Democratic Party, won Sunday's elections, but with a smaller majority in the powerful lower house of parliament than it held previously. That could make it harder for Prime Minister Junichiro Koizumi to move forward with his controversial economic reform plans.

Exit polls suggest that the Liberal Democratic Party and its two smaller coalition partners will retain power after Japan's general election Sunday. But the ruling bloc is projected to have lost a significant number of the seats it held in the past parliament.

The polls indicate that Prime Minister Junichiro Koizumi's LDP lost as many as 25 seats, and may no longer hold a majority of the 480 seats on its own. The three-party coalition might have lost as many as 30 seats compared with the previous parliament.

Katsuya Okada, Secretary-General of the opposition Democratic Party, said the projected losses reflect voters desire for something different. He said that if the LDP loses more seats, it means that some voters hope for a leadership change.

LDP Secretary-General Shinzo Abe expresses optimism in his party's future, saying it is the only party which can reform Japan and that voters understand this.

The expected win means that Mr. Koizumi, who was re-elected to his legislative seat, is guaranteed a second term, but it is not clear if he will have the public support needed to move forward with his ambitious plans for cuts in government spending, privatization, and cleaning up the troubled banking sector.

The election pitted the LDP, which has been in power almost continuously for a half-century, against the five-year-old Democratic Party. The Democrats recently merged with a smaller opposition group and tried to cast themselves as a genuine alternative to the LDP.

Although other parties have provided token opposition to the LDP over the years, the nation of 127 million people has never had a true two-party system. The Democratic Party hopes to provide that.

The exit polls suggest that the Democrats made a strong showing. Early indications are that it might have increased its 137 seats in the old parliament by 25 percent or more.

Other than the economy, no one issue dominated the election. Both main parties promised to shore up the pension system to cope with an rapidly aging population, and pledged to create new jobs. Mr. Koizumi's LDP supports plans to send troops and cash to war-torn Iraq, but Naoto Kan, the leader of the Democrats, spoke out against these moves.