TOKYO - Japan's ruling Democratic Party (DPJ) is aiming to hold a party leadership election to replace Prime Minister Naoto Kan as early as August 28, the Nikkei business daily reported on Wednesday, citing a senior party source.

A crucial bill enabling the government to issue bonds to cover its budget deficit is expected to be enacted by the end of this month, the Nikkei said.

Enactment of the bill was one of the criteria that the unpopular Kan has said must be met before he fulfils a promise to step down from his post.