The three ruling coalition parties have agreed on the pending issue of how to finance the proposed expansion of the child benefits program, coalition officials said Wednesday.

This will clear the way for the coalition parties -- the Liberal Democratic Party, New Komeito and the New Conservative Party -- to complete their joint tax reform proposals for fiscal 2001, which begins next April.

The expansion of child benefits, proposed by New Komeito, has been the last sticking point in the coalition's tax reform platform, details of which were to be unveiled later in the day.

The three parties have agreed to expand the cash allowance -- payable to parents of dependent children before they enter primary school -- by cutting government spending in other areas in the next fiscal year's budget, the officials said.

For the following years, the program will be financed by revising various deductions in income and residence taxes, they said.

Under the current framework, a couple with annual income of 6.7 million yen or less is entitled to a monthly cash benefit of 5,000 yen each for their first and second children, and 10,000 yen for a third and each subsequent child.

The number of children eligible will increase to 85 percent of the total from the current 72 percent, the officials said.