The cabinet was expected to approve defense policy guidelines updated for the first time in nine years, along with a five-year plan for a military buildup starting from April 2005.

The defense papers were due to be finalized a day after Japan extended its ground-breaking deployment to Iraq by another year.

Press reports said Japan will end its absolute ban on exporting weapons by allowing sales to the United States of components for a missile interception shield, which the allies began researching after North Korea fired a missile over Japan in 1998.

Japan has adhered to defense-only security policy since its bitter defeat in World War II. The US-imposed 1947 constitution said Japan would forever renounce war and renamed the military the Self-Defense Forces.

In 1967, Japan began a self-imposed ban on weapons exports, even while it has produced top-of-the-line equipment for a military forbidden from combat.

The defense guidelines were last updated in 1995 when there were few dramatic changes despite the end of the Cold War.

But press reports said the new outline would for the first time explicitly mention threats from China and North Korea.

Japan has seen growing friction with China, with Tokyo saying Chinese vessels have crossed the countries' gas-rich maritime boundaries 33 times this year.

China has also been angered by Japanese Prime Minister Junichiro Koizumi's visits to a Tokyo shrine dedicated to 2.5 million Japanese war dead including seven people hanged for World War II war crimes.

An advisory panel to Koizumi mapping out the defense strategies recommended in October that Japan study acquiring the ability to launch pre-emptive strikes.

But New Komeito, a Buddhist-oriented partner in Koizumi's coalition, said the government has scrapped plans for long-range missiles after the party's protests.

Any sign of a military build-up would be certain to alarm Japan's neighbors.

But news reports said the blueprint would include the first-ever budget cut with the government putting 24.24 trillion yen (233 billion dollars) into the five-year program, down by nearly 800 billion yen from the current plan.

The finance ministry had sought a deeper cut but gave in due to the emergence of new threats such as missiles and mass-scale terrorism, the Yomiuri Shimbun said.

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