Japanese Prime Minister Junichiro Koizumi's tactics have been so extreme that a member of his own Liberal Democratic Party, Housei Norota, says: "It's like suicide bombing."

Late last month, an LDP member of the Diet (parliament) who had spoken against Koizumi's pet project, and was then pushed into voting for it by his own faction within the party, was even driven to hang himself.

And what is this pet project that causes so much anguish? Post office reform, of course.

Now there's going to be an election about it, and the LDP might lose power in Japan for only the second time in 50 years.

Koizumi pushed the post office reforms through the lower house of the Diet last month by a majority of just five votes, but 51 LDP members either voted against them or abstained.

He was less lucky on Monday in the upper house, where 22 members of his own party voted against the reform project and it was defeated.

So what does he do now? He can't override the upper house, because that takes a two-thirds majority in the lower house, which he obviously doesn't have. He can't call a new election for the upper house because the constitution doesn't let him.

So he dissolves the lower house and commits the country to an election two years ahead of schedule, on September 11, presumably in the hope of getting a two-thirds majority.

Only there isn't any hope of that. The polls suggest that the LDP may even lose its majority to the biggest opposition party, the Democratic Party of Japan (DPJ). All this over post office reform?

Koizumi was always a maverick within his deeply conformist party, from his 70s rock-star hair to his obvious contempt for the factions that have always dominated the LDP's internal politics.

He is Japan's longest-serving Prime Minister in two decades, but his main purpose in seeking the leadership job in 2001 was to reform the faction-driven, patronage-ridden LDP that has dominated Japanese politics for so long. And if he couldn't do that, he was prepared to kill it.

What has reforming the post office got to do with that? Japan Post is the largest financial institution in the world, with almost $3 trillion in savings and deposits.

It is Japan's biggest savings bank, with 10 times as many branches (25,000) as all seven of Japan's main national banks combined. And 85 per cent of adult Japanese have postal savings accounts.

It also writes 40 per cent of the insurance policies in the world's second-richest country. On the side, it delivers the mail.