Goshi Hosono would have been the seventh prime minister in six years, and Japan's youngest ever head of government, if he had won.
Noda will face challenges from three of his backbenchers: former internal affairs minister Kazuhiro Haraguchi, former agriculture minister Hirotaka Akamatsu, and another former agriculture minister Michihiko Kano.
Observers say the factionally-divided DPJ is likely to suffer at the hands of voters disappointed by their lacklustre three years in office.
The DPJ came to power in 2009 after five decades of almost unbroken rule by the Liberal Democratic Party (LDP). But its once-radical agenda was largely jettisoned.
The LDP is also in the throes of its own leadership tumult, with incumbent Sadakazu Tanigaki today saying he would not run for re-election.
DPJ members vote on September 21. The LDP ballot will come five days later.
Over the weekend Toru Hashimoto, the populist governor of Osaka, began in earnest his push onto the national political scene, when he announced the name of the party that will put up candidates in the general election.
- AAP