TOKYO, JAPAN (AFP) - Japanese Prime Minister Naoto Kan said Friday fiscal reform would remain top of his agenda, despite his party's drubbing in recent polls blamed partly on talk of a doubling of sales tax.

"I am reflecting on the fact that my comment about consumption tax, which was taken as abrupt, had a great impact on the election," Kan said as parliament convened a special session following the July 11 upper-house vote.

Ahead of the election, Kan had raised the possibility of doubling the five percent sales tax in a bid to revive Japan's battered finances. Japan's public debt is nearing 200 percent of gross domestic product, the world's highest.

But the suggestion was widely seen as a voter turn-off with Kan's centre-left Democratic Party of Japan (DPJ) taking a beating in the poll only a month after he took over from Yukio Hatoyama as prime minister.

"However, the task to reconstruct finances is an inescapable, major task regardless of who is prime minister and which political party is in charge of government," Kan told a news conference.

"Therefore, I want to express my resolve again to tackle the issue."

The election destabilised the Japanese parliament where the DPJ commands a solid majority in the lower house but faces a numerically superior opposition in the upper house.

Kan said he hoped that his party, which ended a half century of almost unbroken conservative rule with a landslide victory in a general election last August, could find some common ground with its opponents.

"I believe opposition parties will also act with the people in mind. There will definitely be areas on which we can agree," Kan said, adding he would emphasise the creation of jobs and economic growth in working out the state budget for the next fiscal year.

Kan, who was finance minister under Hatoyama's government, has come under fire from within the DPJ for hinting at a tax hike without consulting the party.

Kan became the party's president in early June after Hatoyama stepped down when approval ratings hit rock bottom over a political funding scandal and his wavering policy on an unpopular US base on Okinawa.