It is meant to ease concerns about building high-end satellites and to help the space program become more internationally competitive.

The Liberal Democratic Party (LDP) plans a final draft of the law by August with an eye to submit it to next year's parliament session.

"It is universally recognized that in the peaceful use of space it is possible to have development for military purposes, as long as the purpose is for self-defense and not aggressive," an LDP subcommittee on space said in a statement.

The United States forced Japan to renounce the right to a military after its defeat in World War II.

In 1969, the Japanese parliament adopted a resolution that limited the use of space to non-military applications.

The subcommittee said the restriction had stifled innovation.

"Unless politicians take the initiative to solve this problem, Japan will not be able to achieve the breakthrough of building a national strategy that makes use of space," the statement said.

Takeo Kawamura, the member of parliament who heads the subcommittee, stressed that Japan would still have a strictly defensive posture with the change.

"Even if we think a country, for example, is dangerous to us, it doesn't mean that we would launch an attack before they launch a missile," he told AFP.

Japan has been in a hurry to build its defenses after North Korea stunned the world in 1998 by firing a missile over the Japanese mainland into the Pacific.

Japan has maintained troops and launched spy satellites despite its official pacifism.

Tokyo successfully launched an H-2A rocket carrying the nation's first two spy satellites in March 2003. But the following attempt in November 2003 failed when Japan had to destroy satellites after takeoff due to a malfunction.

The LDP has also proposed a revision of the constitution to state for the first time since World War II that Japan has a military, even though the country would remain pacifist.

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