SCENARIOS- Japan set for change of government with election

By Chisa Fujioka

(Reuters) - Japan's cabinet on Tuesday signed off on unpopular Prime Minister Taro Aso's plan for an election, expected on August 30, paving the way for a possible change in government after more than 50 years of almost unbroken rule by his party.

A win for the opposition Democratic Party, ahead of Aso's conservative Liberal Democratic Party (LDP) in polls, would raise the chance of breaking through a policy deadlock in parliament, where the opposition controls the upper house and can delay bills.

The Democrats are promising to pay out cash handouts to families, keep the sales tax at 5 percent for the next four years and reduce bureaucrats' control of policy-making as a way to cut wasteful spending.

It also wants to adopt a diplomatic stance less subservient to main security ally the United States while cultivating good ties with Asian neighbours such as China.

Following are possible outcomes of the election for the 480 seats in parliament's lower house, where Aso's LDP and its junior coalition partner, the New Komeito, now hold a combined 333 seats.

CHANGE IN GOVERNMENT

The Democratic Party looks set to either win a majority on its own or become the biggest party in the lower house and form a coalition with smaller allies, ousting the LDP from power for only the second time in its 54-year history.

Financial markets would welcome the prospect of a breakthrough in a long-running political stalemate but worry about the ability of the untested Democrats to govern and the impact of their ambitious policies on Japan's huge public debt.