TOKYO, OCT. 20 (TUESDAY) -- Japan's ruling party selected former finance minister Noboru Takeshita, 63, today to succeed Prime Minister Yasuhiro Nakasone, who is scheduled to step down in a few weeks.

Officially, Takeshita was endorsed by party leaders for the post of president of the Liberal Democratic Party. But because the party controls Japan's Diet, or parliament, the party presidency carries with it the job of prime minister. Takeshita can be expected to serve at least one two-year term.

The selection of the diminutive, self-deprecating Takeshita is to be approved formally Oct. 31 by a vote of the party's 445 Diet members. His choice came after Nakasone intervened in the race to anoint Takeshita over his two rivals, Finance Minister Kiichi Miyazawa, 68, and former foreign minister Shintaro Abe, 63.

Abe and Miyazawa withdrew from the race and agreed to back Takeshita after Nakasone announced his decision early this morning, and a few hours later a presidential election committee of the party officially endorsed Takeshita.

U.S. government officials, including Ambassador Mike Mansfield, have spoken favorably about each of the candidates, although officials have said that none of them has Nakasone's high-profile, presidential style of leadership, which is very unusual in Japan.

Takeshita, known as a deft behind-the-scenes political operator who is particularly good at raising money, was criticized by some here as weak in the international realm and unable to exert the sort of dynamic leadership Nakasone has in relations with other countries.

On a policy level, there were few differences among the three contenders, known as the "new leaders." All of them served in Nakasone's Cabinet and pledged to continue his policies. All of them vowed to work to improve relations with the United States, revamp Japan's antiquated tax system, slow the high rise in land prices and further open Japan's markets to foreign goods.

Under party rules Nakasone must give up the party presidency by the end of October and the prime minister's job by the first week of November. He has held those positions for the last five years, the second-longest tenure in the post-war era.

Nakasone was called in to mediate when negotiations among the three candidates deadlocked. Apparently eager to cast a "deciding vote" in the race in order to maintain his influence after leaving office, Nakasone made his decision at home and, with a touch of melodrama, had it conveyed to the candidates just after midnight in a sealed white envelope.

Party rules permit selection of a new party president by a vote of party Diet members, but the prevailing sentiment among ruling party officials has been that deciding the issue through a vote would be too "divisive," and negotiations were favored.

From the beginning, Takeshita, leader of a 114-member faction of the party, was viewed as the man to beat on the basis of sheer numbers.

Miyazawa heads a 89-member faction, the second biggest. An urbane intellectual, Finance Minister Miyazawa was the favorite of the business community and many government bureaucrats, who wield great power in Japan. But he was viewed as ineffective in the domestic political arena.

Abe's faction is fourth largest after that commanded by Nakasone. Supporters described Abe as most like Nakasone, with a blend of international and domestic political skills. But detractors rated him as only moderately skilled on both counts.

Takeshita's backers said their man had the political muscle to accomplish some significant domestic goals, such as tax reform, that have eluded even Nakasone.

In his endorsement, Nakasone indicated that Takeshita's political skills were a prime reason for backing him. "In the current serious situation, what is most needed in Japanese politics is to take strong action to enact domestic reforms," Nakasone said.

Takeshita, in a press conference early this morning, said he would not celebrate until after the full Diet vote for prime minister, which is likely to occur around Nov. 6.

In earlier interviews, Takeshita acknowledged that he was unlikely to be the sort of assertive, imaginative leader Nakasone has been. "I don't hold the brush, but I like to admire the painting," he said.

He recently told a Japanese newspaper, "I don't think I'm a very bright man. Besides, being modest does no harm."

Takeshita, who comes from an affluent, political family, has served in various Cabinet positions, including construction and finance minister, since 1971. He has been in the Diet for 30 years.

Takeshita is also a judo black belt. His official campaign biography says, "In Japan, there is an old saying . . . , gentle on the outside, iron-hard within. That is Takeshita."

The official campaign to choose a replacement for Nakasone began less than two weeks ago and included few of the political symbols Americans usually associate with a campaign season, such as speeches, parades and debates.

Because the prime minister is selected by the Liberal Democratic Party's 445 Diet members, the race mostly has taken place away from the public eye, as the three factions vied for support from uncommitted Diet members, with promises of Cabinet positions and financial support.