A funding scandal dogging the linchpin in Japan's main ruling party could thwart the party's efforts to regain the political momentum lost since its historic election victory last summer.

Prosecutors questioned Democratic Party of Japan (DPJ) secretary-general Ichiro Ozawa on Saturday over an alleged false political fund report on a land purchase in Tokyo by his fundraising group in 2004. The move came after the Tokyo district public prosecutor's office arrested two former secretaries and a current aide to Ozawa earlier this month.

The scandal threatens to delay a crucial budget aimed at bolstering the country's economy and scupper the party's chance of winning a mid-year election, adding to the woes of Prime Minister Yukio Hatoyama's four-month-old government.

Opposition parties have seized on the investigations to keep the DPJ government on the defensive during the spring Diet session that starts on Jan 18. The former ruling Liberal Democratic party (LDP) has threatened to boycott the parliamentary debate on an extra budget to prop up the economy if the DPJ dodges questions about the scandal ensnaring Ozawa. The investigation has eroded voter support for Hatoyama's government, too, as surveys show. This comes before an upper house election, which the DPJ needs to win an outright majority to ensure smooth passage of laws, raising the risk of policy stalemate in the long run.

Support for Hatoyama's Cabinet, which had already slid because of voters' doubts over his leadership, fell from last month's 48 to 42 percent, according to an Asahi newspaper poll. It is a real come down from the above 70 percent after Hatoyama assumed office in September. The percentage of people planning to vote for the ruling party in the upper house election has fallen from 35 to 28, in a Yomiuri poll.

A majority of voters polled by media surveyors want Ozawa to step down from his key post. But the former LDP chief secretary-turned-DPJ bigwig has refused to do so, saying he hadn't done any wrong intentionally. Ozawa resigned from the LDP to form the Japan Renewal Party, which he ultimately renamed the Liberal Party in 1998 after changing the name a couple of times.

Hatoyama, who also has been the subject of a damaging investigation into his fundraising group, has backed Ozawa, saying he hoped the DPJ heavyweight would get a chance to prove his innocence soon. It seems Hatoyama has no option but to back Ozawa because of the latter's strong influence in the DPJ. Losing Ozawa would undermine Hatoyama's political base seriously.