TOKYO - Japan's ruling Democratic Party reached a broad agreement with the main opposition parties on Thursday to pass a bill designed to promote renewable energy, Jiji news agency said, setting the stage for unpopular Prime Minister Naoto Kan to resign once the law is enacted.

Kan, Japan's fifth premier in five years, repeated on Thursday he was ready to quit once three conditions he had set were met. Of those, a small extra budget for recovery from the March earthquake and tsunami has been passed and a bill enabling fresh borrowing to fund this year's budget is set to be enacted this month. Passing the energy bill is the third condition.

"When the two bills are enacted, we will begin a process of selecting the next (ruling) Democratic Party president. Upon selection of the new leader, I will resign as prime minister," Kan told a parliamentary panel.

Finance Minister Yoshihiko Noda, 54, a fiscal conservative who wants to rein in Japan's huge public debt, has emerged as a leading contender to replace Kan.