Prime Minister Junichiro Koizumi on Wednesday formally instructed his Cabinet ministers in charge of the economy to compile a comprehensive package of antideflation measures, following the launch Tuesday of such discussions by a key government policy panel.

Koizumi gave the ministers until the end of the month to come up with the outline of the package, which will include accelerating bad-loan writeoffs by banks.

The order was to be given at an evening gathering at the Prime Minister's Official Residence attended by Finance Minister Masajuro Shiokawa, economic and fiscal policy minister Heizo Takenaka, Financial Services Minister Hakuo Yanagisawa and Economy, Trade and Industry Minister Takeo Hiranuma.

On Tuesday, the Council on Economic and Fiscal Policy began full discussions on ways to tackle deflation, focusing on accelerating commercial banks' disposal of bad loans, funneling more public funds into banks and expanding credit-easing steps by the Bank of Japan.

However, it is unclear whether the government will be able to devise effective measures by the end of this week, given the controversy over the re-injection of public funds and additional quantitative monetary steps of the central bank.

Both Koizumi and Yanagisawa said Wednesday they see no need at present to inject public funds into banks to pre-empt a financial crisis. The government has funneled public funds into banks twice before -- 1.8 trillion yen in 1998 and 7.5 trillion yen in 1999 -- to deal with the widespread credit crunch in Japan.

"Basically, there's no need to pump in capital now," Koizumi told reporters. "(But) we stand ready to do so if the need arises."

Separately, Yanagisawa told the House of Representatives Budget Committee that Japan is not in a severe enough situation to warrant injections of public money into banks.

"I don't think we are in a crisis," Yanagisawa said. "Under the principles of a free economy, it is inappropriate to forcibly inject capital into banks. We just can't do that."

Yanagisawa said the government is studying steps to tackle deflation and avert a financial crisis.

Hideyuki Aizawa, a Liberal Democratic Party heavyweight, said he also sees no need to pump public capital into banks.

"Legally, forced injections would be difficult," he told reporters. Aizawa heads a special LDP panel on antideflation measures.

In the council's meeting Tuesday, BOJ Gov. Masaru Hayami rejected calls by other members to further boost liquidity injections into the banking system, following the credit-easing decision in December.

The antideflation package is also expected to call for a government-backed stock-purchasing body and the tightening of regulations on the short selling of stocks to stimulate the slumping stock market. An enhanced safety net to aid small companies is also anticipated.