On Sunday, the ruling Liberal Democratic Party (LDR) chose Fukuda, a 71-year-old veteran of the Japanese political scene, as its new party leader. As the lower house is dominated by the party, this guaranteed that Fukuda would be elected prime minister.
Fukuda replaces Shinzo Abe, who resigned abruptly on Sept. 12, suffering from health and stress related problems. He had been in power for less than a year.
The entire cabinet, including Shinzo Abe, gathered at the central Tokyo residence of Mr Fukuda Tuesday morning to officially quit their posts before the appointment of a new cabinet by Mr Fukuda.
However, Fukuda has announced that he intends to retain many members of Abe's cabinet, which was reshuffled just last month following disastrous showings in elections to the upper house.
Former foreign minister Taro Aso, Fukuda's sole rival in the LDP leadership race, was reported to have declined an offer of a cabinet post in the new cabinet.
The opposition-dominated upper house chose the leader of the Democratic Party of Japan, Ichiro Ozawa, as prime minister. However, under the Japanese Constitution, the decision of the lower house is the deciding one.
