The nation's key policy-setting panel on Thursday released an economic reform package for 2003, featuring local finance changes and deregulation in some sectors.

At the same time, however, many planned reforms in the package were diluted, after meeting fierce opposition from Liberal Democratic Party lawmakers who want to maintain their vested interests.

The government's 2003 reform blueprint, finalized by the Council on Economic and Fiscal Policy, constitutes the third phase of the structural reform agenda of Prime Minister Junichiro Koizumi.