The policy chief of Japan's main governing Liberal Democratic Party has decided to step down in response to a growing money scandal involving the LDP's largest faction.

Hagiuda Koichi is expected to soon submit his resignation as the chairperson of the LDP's Policy Research Council to Prime Minister Kishida Fumio.

Hagiuda's office is suspected of having received kickbacks from his party faction and failing to report the money as income in political funds reports.

He said on Monday that as the Policy Research Council chairman he would bear heavy responsibility if the scandal led to the resignation of any Cabinet members.

He is believed to have decided to step down given Kishida's decision to replace four Cabinet members, including Chief Cabinet Secretary Matsuno Hirokazu, and Economy, Trade and Industry Minister Nishimura Yasutoshi.

Hagiuda is a senior member of the Abe faction, formerly led by late Prime Minister Abe Shinzo. He is known to have been close to Abe.

Hagiuda's constituency in Tokyo has elected him to the Lower House six times.

He has served as economy and education ministers, and assumed his current senior party position in the summer of 2022.