Japan's population is set to drop this year for the first time since records began more than a century ago, according to a government report.
Many Japanese women see motherhood as a burden
Deaths are expected to exceed births by 10,000, and inward migration will not make up the difference.
The drop, which has been predicted for years, was blamed on a falling birth rate and a rise in flu-related deaths.
The government has acknowledged a shrinking population could jeopardise Japan's long-term economic health.
"Our country is now standing at a major turning point in terms of population," Health, Labour and Welfare Minister Jiro Kawasaki told a news conference.
"We must take counter-measures against the falling birth rate along with measures to support and foster our future generations," he said.
The latest data showed the number of births - falling since the 1970s - was expected to fall by 44,000 to 1,067,000 in 2005.
The number of deaths rose 48,000 to 1,077,000 as Japan's ageing population fell prone to illnesses like flu.
Japan's population research institute said that even when foreign migrants were taken into account, the country's population would still fall by 4,000 in 2005.
Chief Cabinet Secretary Shinzo Abe said a government panel was due to recommend appropriate policies to this end next June.
"We consider measures against the declining birth rate as very important," he said. "We have expanded child-support allowances in the recent budget, and we hope to further expand other benefits to counter the declining birth rate."
Japanese women have cited inadequate child care, low part-time wages and long hours worked by their husbands as some of the reasons why they do not have any children, or only have one.
Japan's population of 128 million is projected to fall to 100 million by 2050 if current trends continue.