The economic crisis has caused homelessness to increase sharply
Japan is to implement another fiscal stimulus plan of more than 10tn yen ($99bn; £66bn) to fight the recession.
It comes on top of 12tn yen of stimulus spending that has already been agreed. The new sum amounts to more than 2% of the annual output of Japan's economy.
Finance Minister Kaoru Yosano said details of the new package should be finalised by Friday.
It will create a financial safety net for temporary workers, boost struggling firms and support regional economies.
The money will also be used to promote solar energy generators, as well as to support nursing and medical services.
The slowdown in the world's second-biggest economy is steeper than that being experienced in the US or Europe.
"The prime minister has instructed us to compile measures that would include real spending of more than 2% of GDP as we take into account a fall in our economy, which is bigger than that in other leading nations, as well as the need for international cooperation," said finance minister Kaoru Yosano.
Prime Minister Taro Aso had previously said he would not hesitate to issue new bonds to cover the cost of the proposed steps, but on Monday the finance minister said the issue had not been raised in their discussions.
However, he also acknowledged the depth of the problems facing the Japanese economy.
"Japan's economic growth rate is expected to fall the most among advanced nations," he said on Monday.
Series of blows
Japan has been hit by a series of economic blows that has led Mr Yosano to describe the conditions as the country's worst economic crisis since the end of World War II.
The country's exports plunged by a record 49.4% year-on-year in February, as worldwide demand for its products collapsed.
Japan's economy contracted by 3.3% in the last three months of 2008, which was its worst showing since the oil crisis of the 1970s.
And figures released last week showed retail sales in Japan suffered their biggest fall in seven years in February.
Meanwhile, Japan's unemployment rate has risen to a three-year high as companies continue to slash jobs. The jobless rate rose to 4.4% in February, from 4.1% in the previous month.