Japan's ruling coalition has begun policy talks with an opposition party in a bid to reach an agreement on a new economic stimulus package.

The ruling Liberal Democratic Party and its partner Komeito lost their combined majority in the Diet's Lower House in last month's general election.

The coalition is courting the support of the Democratic Party for the People on an issue-by-issue basis, in order to steadily pass legislation in the Diet. The DPFP has increased its presence after scoring major gains in the election.

The LDP and DPFP policy chiefs met on Friday to hash out the details of the economic package, which the government hopes to compile by the end of the month.

The DPFP's demands include raising the minimum annual income subject to taxation.

The current threshold stands at 1.03 million yen, or about 6,800 dollars. The party wants to raise it to about 11,600 dollars, by expanding tax deductions.

The DPFP is also seeking cuts in gasoline prices as well as electricity and gas bills to ease the cost of living. It says measures to support the reconstruction of the Noto region should also be beefed up. The area in central Japan was struck by an earthquake in January and torrential rains in September.

The LDP responded that it will study the measures. The policy chiefs will meet again next week. The two parties also agreed to have their senior officials in charge of tax issues join the talks.

The policy chiefs of Komeito and the DPFP met later in the day. Komeito responded positively on holding discussions to review the income tax threshold. They agreed to arrange three-way talks involving the ruling coalition and the DPFP.

Komeito's policy chief later told reporters that he could agree with many of the DPFP's proposals, although the two parties' priorities might be different.

The ruling coalition is also hoping to gain the DPFP's cooperation in compiling a supplementary budget, which will earmark funds for the economic package.