Reports from Japan say the ruling Liberal Democratic Party and the Liberal Party have agreed to set up a series of working groups to help implement policies under a planned coalition government.

The Kyodo news agency quoted officials as saying the two parties had also agreed to arrange a meeting between the Prime Minister, Keizo Obuchi, and the Liberal Party leader, Ichiro Ozawa, after an earlier meeting was called off.

Correspondents say differences still need to be resolved before any coalition can be formed, despite a shared desire to overcome economic recession.