Japanese prime minister Fumio Kishida's ruling Liberal Democratic Party (LDP) held on to their strong majority in Sunday's parliamentary election.

The conservative LDP secured 261 seats in the 465-member lower house of Japan's two-chamber Diet.

Japan's parliament is called the National Diet and comprises of the more powerful lower House of Representatives and the upper House of Councillors.

The absolute majority will give the ruling party control of parliamentary committees and make for the easier passage of legislation, including key budget proposals.

The party during the last election in 2017 had managed to secure 276 seats.

However, the LDP's single-party majority is a big victory for the 64-year-old prime minister, who took office only last month.

The result was in contradiction to the initial exit polls, that suggested the LDP would need to rely on its junior coalition party to form a government amid unhappiness at its handling of the Covid-19 pandemic.

Yoshihide Suga, the previous prime minister, had to step down in September after only a year in office due to dwindling poll ratings. Many were unhappy with the government’s decision to press on with hosting the Tokyo Olympics, despite rising Covid case numbers.

Mr Kishida called the elections soon after being chosen by his party to replace Mr Suga. A soft-spoken former banker, he has been pushing to increase military spending to counter the increasingly aggressive influence of China in the region.

The prime minister had also promised to address wealth inequality, touting a "new capitalism" that has led to concern among investors. Prior to the elections, he had promised to spend "tens of trillions of yen" to support the Japanese economy amid the pandemic.

Following LDP's victory, Japanese stocks cheered with the Nikkei up 2.38 per cent soon after trade began. The higher benchmark share index indicates that investors believed that Mr Kishida's economic stimulus plans will pass smoothly through parliament.

Mr Kishida had announced that the administration would attempt to compile an extra budget this year.

On Monday, the prime minister said he would make full use of his strong election win in running the government and parliament. "We won a majority, which I think in this election was significant," he told reporters.