TOKYO In the first clues to how much he will shake up Japan's hidebound ruling party, Japan's prime minister-in-waiting, Junichiro Koizumi, on Wednesday tapped a staunch ally and a recent rival for top party posts, Reuters reported.

Parlaying his reputation as an eccentric into a powerful image as a popular reformer, Koizumi rode a groundswell of rank-and-file support to a stunning victory on Tuesday in the race to lead Japan's Liberal Democratic Party (LDP) and become the 11th prime minister in 13 years.

His "Change the LDP, Change Japan" platform won resounding support from local party members deeply afraid of losing the July election for Parliament's Upper House, but has left doubts about how his reformist rhetoric will translate into policies.

Koizumi boasted he had kept his promise to break the ties of party factions in handing out key party posts and said he would do the same when distributing cabinet portfolios.

"I have finally made personnel decisions free of factional constraints and believe I won the understanding of the LDP," he told reporters. "I intend to do the same in selecting ministers."

Media and analysts agreed Koizumi's victory signalled a shift inside a party long seen by voters as tainted by corruption, bound by special interests and dominated by factional feuding.

But his choices for the top party positions indicated that -- as anticipated -- Koizumi was now engaged in a delicate balancing act between keeping party harmony and pushing reform.

Koizumi tapped close ally Taku Yamasaki for the position of LDP secretary general, a post that has a commanding say in deciding party matters and liaising with coalition partners.

Economics minister Taro Aso, who placed a distant third in Tuesday's LDP election for party president, becomes LDP policy chief, while former trade minister Mitsuo Horiuchi takes over as head of the LDP's decision-making general council.

------------Early Test, Perceptions Key---------------

Political analysts welcomed the selection of Yamasaki, a key ally and member of one of the LDP's smallest factions, for the party's number two post as a sign that times were changing.

Yamasaki is an outspoken advocate of revising Japan's pacifist Constitution and a bigger global role for Tokyo.

But factional dynamics may have come into play elsewhere.

Koizumi defeated the early favorite, former prime minister Ryutaro Hashimoto, who was backed by the LDP's biggest and long-dominant bloc. None of the three top appointees are from that group, but Horiuchi has close connections with its members.

"It's an indirect olive branch to the other side," said Chuo University professor Steven Reed.

A question mark also hangs over Aso, whose stress on keeping the economy from slipping into negative territory contrasts with the higher priority Koizumi has placed on structural reform.

Skeptics worry Koizumi will backpedal on fiscal and economic reform to keep support from those in the LDP who advocate more public spending to keep Japan's fragile economy afloat.

Asked about those concerns, Koizumi said: "I got his understanding that there is no economic recovery without reform," a reference to his own campaign mantra.

Some analysts said bringing Aso on board was a good move.

"It may sound irrational, but politics doesn't mean smashing your enemies, but making sure you have more friends than foes," Reed said. "No one can say it's the LDP as usual."

----------------Coalition Tightrope, Election Test----------

The LDP poll was called after the ruling bloc decided to ditch the hugely unpopular Prime Minister Yoshiro Mori to boost its chances in the Upper House election. The result reflected growing distaste for the sort of smoky back room carve-up that brought Mori himself to power just over a year ago.

Koizumi is all but certain to replace Mori, as long as he keeps the backing of the ruling coalition, which has a majority in the Lower House. Parliament will vote on Thursday, after which Koizumi will pick his cabinet.

But the new leader must walk a tightrope between keeping reformist pledges and maintaining party and coalition unity.

Names were already being floated for possible cabinet posts, including former LDP secretary general Koichi Kato, another reformist Koizumi ally whose career suffered a major setback when he tried, and failed, to oust Mori last November.

Financial markets want to know whether Koizumi will keep the reform-minded chief of the Financial Services Agency, Hakuo Yanagisawa while domestic media are wondering what role his supporter, outspoken Iconoclast Makiko Tanaka, will play.

Policy talks with the LDP's two partners, the Buddhist-backed New Komeito Party and the tiny New Conservatives, were underway on Wednesday and New Komeito Secretary General Tetsuzo Fuyushiba told reporters a deal could probably be reached within the day.

No love is lost between Koizumi's camp and the two allied parties. He has said he would keep the current coalition, without which the LDP lacks a majority in Parliament, but added that he was open to cooperation with other parties.

Koizumi's true test will come in the Upper House election in July. The party's prospects appear to have received a huge boost from his selection as LDP leader, but it remains to be seen if voters are convinced that real change is afoot.