Former defence minister Shigeru Ishiba is set to become Japan's prime minister after winning a closely fought contest on Friday in his fifth and what he called final attempt to lead the ruling Liberal Democratic Party.

The 67-year-old political veteran prevailed over hard-line nationalist Sanae Takaichi in a run-off vote in what was one of the most unpredictable leadership elections in decades with a record nine candidates in the field.

The leader of the LDP, which has ruled Japan for almost all of the post-war era, is essentially assured of becoming the next premier because of its majority in parliament. A special session of parliament is scheduled for Tuesday to vote Ishiba into office.

"We must believe in the people, speak the truth with courage and sincerity, and work together to make Japan a safe and secure country where everyone can live with a smile once again," an emotional Ishiba said in a speech to LDP lawmakers after the result.

Ishiba on Friday stressed the need for the country's economy to fully emerge from deflation.

Revitalizing consumption is key for Japan to emerge from economic stagnation, he said, adding the new administration must consider the most effective means to cushion the blow to households from rising inflation.

The scramble to replace premier Fumio Kishida was sparked in August when he announced he would step down over a series of scandals that plunged the LDP's ratings to record lows.

Ishiba, a self-proclaimed lone wolf whose contrarian views and spats with colleagues contributed to four previous failed leadership bids, has long been popular with the general public. But he said this was his "final battle."

With the LDP facing a general election some time in the next 13 months, analysts said Ishiba's selection suggests some in the party appear to have put aside personal grievances to harness his public appeal.

They have "gravitated toward a popular figure who does well in media appearances and isn't afraid to criticize his own party when he thinks they're in the wrong," said Jeffrey Hall, a lecturer at Kanda University of International Studies.

Challenges ahead

He must quell anger over rising living costs and simmering anger about his scandal-plagued party and navigate a volatile security environment in East Asia fuelled by an increasingly assertive China and nuclear-armed North Korea.

His approach to diplomacy with Japan's closest ally, the United States, will be in focus given he has repeatedly called for a more balanced relationship with Washington.

In his campaign, he called for the creation of an Asian NATO, an idea that could draw ire from Beijing and has already been dismissed by a senior U.S. official as hasty.

The U.S. ambassador to Japan, Rahm Emanuel, congratulated Ishiba, posting on X that he looked forward to working with him to strengthen the U.S.-Japan alliance. A spokesperson for China's foreign ministry, asked about Ishiba's appointment, said Beijing hopes Japan has an "objective and correct" understanding of China.

Ishiba entered parliament in 1986 after a short banking career. His outspoken views have earned him enemies in the LDP.

He was sidelined by outgoing Prime Minister Kishida, becoming a dissenting voice in the party who enjoyed broad support from LDP rank-and-file members as well as the public.

Ishiba has rebelled on policies including the increased use of nuclear energy, a contentious subject due to the devastating meltdown of the Fukushima nuclear plant in 2011, and has criticized his party for supporting Japan's ban on married couples using separate surnames.

Ishiba, who has also served as agriculture minister, promised to move some ministries and government agencies out of Tokyo to help revive Japan's moribund regions.

To solidify his rule over a fractured party, Ishiba will need to draw from a wide base to form his cabinet, said Rintaro Nishimura, an associate at The Asia Group Japan.

"If he just rewards the people who supported him, that's going to cause a lot of trouble with the people who supported Takaichi and the people who dislike him," Nishimura said.

Ishiba is expected to announce his cabinet after Tuesday's parliament session.