Prime Minister Junichiro Koizumi's ruling party won a landslide victory in general elections Sunday as voters handed Japan's maverick leader a remarkable mandate to enact a new stage of reforms in the world's second-largest economy.

The larger-than-expected triumph capped a bold gambit by Koizumi, who had put his job on the line in search of fresh public backing for his economic agenda, particularly the privatization of the $3 trillion postal service, as well as his vision for a stronger Japan more closely aligned with the United States.

His Liberal Democratic Party won its largest majority in the 480-seat lower house of parliament since 1986, winning 296 seats, a gain of 84. The LDP's smaller coalition partner, the Buddhist-led New Komeito, grabbed 34 seats.

The big loser was the opposition Democratic Party, which had hoped to seize power from Koizumi and had called for a pullout of Japan's noncombat troops from Iraq along with a withdrawal of U.S. Marines from Okinawa. Instead, the party won only 113 seats, down from 177.

While seen as a boon for Japan's halting reform effort and a personal triumph for Koizumi, the prime minister's new mandate is likely to continue a period of heightened tension in East Asia, particularly in Japan's relationship with China. During Koizumi's four-year tenure, the region's two great powers have sparred over rights to drill for natural gas in the East China Sea and engaged in a heated debate over Japan's perceived lack of contrition for past war crimes.

Koizumi's victory came after his extraordinary makeover of the LDP, a traditional and nationalistic party that has ruled Japan for most of the post-World War II era. Last month, Koizumi, 63, known here by the moniker "Lion Heart," purged his party of hard-liners who opposed his reform campaign. At the same time, he brought in women and younger candidates who backed his agenda for change, creating dazzling political theater as he pitted his so-called assassin candidates against the ousted old guard.

"I have destroyed the old LDP," a victorious Koizumi told reporters Sunday night. "It has become reborn as a new party."

Koizumi was able to focus the public debate largely on the postal service as a symbol of his move to overhaul Japan Inc. Essentially the world's largest public bank, with a bloated workforce of 380,000, its huge reserves have long been used as a back door for old-guard LDP members to finance pork-barrel projects in their home constituencies. Postmasters -- a job often passed from father to son -- have been used as unofficial campaign aides on election day.

While rural Japanese remain largely opposed to reforms, Koizumi's campaign stirred up record support for the LDP from young, urban and unaffiliated voters for whom the ruling party had long been anathema.

"I never voted before, but this time I came out to bet on Mr. Koizumi," said Daisuke Muramatsu, 24, an event planner in Tokyo. "Koizumi is riding high. I like his resolute character and his aggressive attitude. These are Japan's biggest round of reforms since Meiji Restoration," in the 19th century, "and I'd like to give Koizumi a chance to pull them off."

Koizumi, analysts say, is now likely to push his postal privatization package through the upper house, which rejected it last month. Koizumi does not have the authority to dissolve the upper house, so after the bill was defeated, he dissolved the lower house and called early elections. He is now betting that upper house members will not dare to ignore the public's clear support for change.

Armed with a massive support base in the lower house, Koizumi will need to ensure that those elected on his reform platform follow through with those plans, economists say. He will also have no excuses for failing to push ahead with other major changes -- including revamping social security in the world's most rapidly aging society.

Though Koizumi has been often criticized for moving too slowly on reform, economists credit his administration with making major progress on cleaning up Japan's bad loans from the 1990s. Bolder steps could further boost confidence in the fledgling economic recovery here.

"Privatization of the post office will be taken as a sign that Koizumi has entered the next and larger phase of reforming Japan," said Robert Feldman, chief economist for the investment bank Morgan Stanley in Tokyo.

Koizumi is likely to continue to push for a historic change in Japan's pacifist constitution, which prohibits the country from maintaining an official military but allows for the Self-Defense Forces to protect the country. Such an effort, coupled with Koizumi's annual visits to Tokyo's Yasukuni Shrine, which honors the nation's military dead, including World War II criminals, is likely to infuriate China.

Just days before the elections, China dispatched five warships near contested natural gas fields in the East China Sea for the first time. China, over Japan's objections, plans to begin tapping gas in that area over the next several weeks. A Japanese defense official said the Self-Defense Forces would conduct their own exercises in international waters to send "a message to Beijing."

Koizumi, President Bush's closest ally in Asia, is also moving to fortify the U.S.-Japan alliance to check China's rising might.

Frustrated by Japan's inability to gain a seat on the U.N. Security Council, the Koizumi administration has indicated that it might take a harder line on the issue. Japan shoulders almost 20 percent of the U.N. budget and plans to demand a reduction of those fees at the General Assembly meeting in New York, which begins Sept. 19, unless Japan is assured clout commensurate with its tab, the Yomiuri newspaper reported.

The head of the Democratic Party, Katsuya Okada, announced that he would resign and take responsibility for the defeat, leaving the opposition leaderless and rudderless.

Koizumi, Japan's longest-ruling prime minister since the 1980s, maintained Sunday that despite victory he will still step down at the end of his current term next September. But people close to him have suggested he may seek another.

"Mr. Koizumi will command concentrated power," said Jun Iio, professor of political science at the National Graduate Institute for Policy Studies in Tokyo. "What will he do with the power? He'll surely privatize the postal system. But other issues are unclear. As for diplomacy with Asia, we know this much: Japan's relations with Asian neighbors won't improve as long as Koizumi is in office."

Special correspondent Sachiko Sakamaki contributed to this report.

Election workers open ballot boxes at a sports center in Tokyo at the start of vote-counting. The Liberal Democratic Party's triumph was larger than expected.Prime Minister Junichiro Koizumi, at his party headquarters, watches tallies in parliamentary elections.Kuniko Inoguchi, one of the party's star candidates, celebrates victory in the voting for the lower house.