Hatoyama's Democratic Party, which will name a new chief Friday, moved quickly to keep Hatoyama's resignation from creating political chaos in the world's second-largest economy.

Several names emerged as possible candidates to succeed Hatoyama, including Finance Minister Naoto Kan, a seasoned progressive veteran with a relatively clean record, and Foreign Minister Katsuya Okada. Kan said he intends to run.

"We cannot allow a vacuum to form," said Ichiro Ozawa, a cofounder of the Democrats who also announced his resignation Wednesday. "We will have a new leader by the end of the week, and a new administration by next week." But analysts said Hatoyama leaves the party a thorny legacy.

"He created a lot of distrust, both within Japan and in Washington," said Tomoaki Iwai, a professor of political science at Tokyo's Nihon University. "I think it was the base issue that brought him down, and the funding scandal sealed his fate."