Tokyo, Japan (CNN) -- Members of the ruling Democratic Party of Japan will meet Friday morning to select a new party chief, who will likely become the country's next prime minister.
Japanese Prime Minister Yukio Hatoyama announced Wednesday he would resign after eight months in power.
"I'm going to step down," Hatoyama declared in a live broadcast on Japanese television NHK, while addressing party members of both the upper and lower houses of the Diet, Japan's parliament.
"I have had many shortcomings, I have been allowed to lead all of you for the past eight months to today. I am extremely grateful for having been given this opportunity," he said.
Japanese Finance Minister Naoto Kan said he would run for the party leader election.
With overwhelming majority at the lower house of the Diet, the ruling party's leader will certainly become the next prime minister.
Eight months ago, Hatoyama 's Democratic Party of Japan won a sweeping victory, an outcome hailed by many as a revolution in Japanese politics.
With promises of a cleaner government, Hatoyama worked to shift the political dynamics in Japan by taking away power from the bureaucrats and granting more power to politicians and local governments.
In his first speech as Japan's 92nd prime minister, Hatoyama made promises that he would conduct a clean and transparent government, launching a task force to monitor government spending.
But soon afterwards, allegations of illegal campaign financing tarnished his administration's image. Some of his cabinet members were investigated for corruption.
His approval rating took further hits over his failed promise to move a major U.S. Marine base off Okinawa to ease the burden of the island, which hosts the majority of the United States military presence in Japan. Earlier this month, calling his decision "heartbreaking," he announced that the base would remain on Okinawa, although relocated to a different part of the island.
Hatoyama's critics claimed he gave in to U.S. pressure, and his government coalition broke up.
Hatoyama said that while he did lose public trust, he hopes future generations will remember his legacy.
"Ladies and gentlemen, I have often been dubbed as an alien and how I understand this is that I see not current Japan but always try to see future Japan," he said.
"Local government, local communities should be the main actors," said Hatoyama.
"In five or ten years people of Japan will understand what I am talking about."
Parliamentary elections are scheduled to take place in July.
The DPJ will now elect a new leader of the party -- most likely on Friday -- who will be in line to be the next prime minister of Japan.
Some time early next week, Hatoyama will dissolve his cabinet in the morning and the new party leader will stand for election as new prime minister by both upper and lower houses of parliament.
CNN's Yoko Wakatsuki and Kyung Lah contributed to this report.