Mergers of cities and towns should be promoted along with decentralization to reduce administrative costs, said Takeshi Noda, the new home affairs minister.

"It is necessary to promote mergers among local cities, towns and villages to provide better administrative services for a lower cost," he said in an interview. "We must promote such moves at the same time as we proceed with decentralization."

Noda joined the new coalition Cabinet of Prime Minister Keizo Obuchi Thursday as the only representative from the Liberal Party, and called on local governments to play a greater role in governing their individual communities.