Prime Minister Yukio Hatoyama's Cabinet on Tuesday laid out basic guidelines for a planned second extra budget for fiscal 2009, but left its size and deadline open, ruling party lawmakers said.

The Cabinet also agreed to sort out its economic policy priorities for fiscal 2010 under the leadership of Deputy Prime Minister Naoto Kan.

Amid fiscal difficulties, the coordination could reduce the scale of the Democratic Party of Japan-led government's key policies aimed at increasing disposable household income.

The extra budget will focus on measures to improve employment conditions and revive the flagging economy, especially through stimulating demand for environmentally friendly products and services, the guidelines presented at a Cabinet meeting said.

The guidelines said the government should "move forward decisively" to "dispel concerns about a double-dip recession and make sure to pave the way for the economy to return to a sustainable growth path."

Still, the Cabinet meeting covered no details of how to draw up the supplementary budget and the budget for the forthcoming fiscal year starting in April, Finance Minister Hirohisa Fujii said at a news conference shortly after the meeting.

Asked whether Cabinet members discussed when the supplementary budget should be drawn up by, Fujii said, "No, they didn't."

Differences of opinion remain over the size of the extra budget.

Kan, also state minister for national strategy, economic and fiscal policy, has said the extra budget would be worth around 2.7 trillion yen.

But Shizuka Kamei, the outspoken chief of one of the junior members of the ruling coalition, said Monday the budget needs to be much larger than that and the government should set no cap on its size before beginning talks on its design.

To hammer out the specifics of the extra budget, the Cabinet decided to launch a new team comprised of senior vice ministers and parliamentary secretaries. The team will be headed by Kan.

The Cabinet will try to craft the supplementary budget as early as by the end of this month, given that the government is planning to submit drafts of it and the annual budget to the ordinary Diet session starting in January.

Regarding the fiscal 2010 budget, Fujii reiterated the importance of maintaining fiscal discipline at the news conference.

"In my opinion, it would be very problematic if the government started to overissue government bonds for the annual budget," Fujii said, adding that the government must keep the new issuance under the record 44 trillion yen planned for fiscal 2009 by the former government led by the Liberal Democratic Party.