The two contenders for the party leadership are former foreign minister Taro Aso and former Cabinet secretary Yasuo Fukuda. Both have begun drumming up support for their leadership bids from lawmakers in both houses of parliament, the agency said.
Kyodo quoted Chief Cabinet Secretary Kaoru Yosano as saying that after a new LDP leader is chosen on September 23, the Cabinet will resign.
The leader of the LDP, which controls parliament's lower house, is guaranteed election to the post of prime minister.
Shinzo Abe unexpectedly announced his resignation as premier on September 12, saying a change of leadership was needed to garner public support for government policies. Abe, 52, was later hospitalized, suffering stress and exhaustion.
Abe announced his resignation following a difficult year-long premiership, with an upper house election defeat and mounting controversy over his country's support for U.S.-led military operations in Afghanistan. He said a change of leadership was needed to push forward Japan's counterterrorism efforts.
Yasuo Fukuda, 71, is seen as the frontrunner in the contest for premier, with the backing of key politicians in the ruling party, and slightly stronger support among voters.
Taro Aso, 66, a key ally of Abe, shares the ex-premier's patriotic values and hawkish stance on security issues.
On July 29, the ruling coalition led by the Liberal Democratic Party lost its majority in the upper house of parliament following a major public scandal in which millions of pension records were lost.
In March 2007 Shinzo Abe, widely considered a nationalist, sparked controversy in Asia and the West by playing down Japanese war crimes in WWII, and claiming there was no evidence that Japan's army during the war abducted around 200,000 young women from Korea, China, and other occupied territories, for use as sex slaves.
