The Japanese cabinet has approved a plan to pump more than $US60 billion into the struggling economy.
The aim is to boost growth, jobs and spending.
Approval by parliament is still needed. Details are expected to be submitted for debate later this month.
A previous stimulus package, announced last month, was intended to create about 200,000 jobs and shift GDP into positive territory, but was criticised as not going far enough.
The BBC reports the Japanese economy is suffering from deflation.
Government debt has risen to about twice the size of its economy during two decades of poor growth.
Analysts said the key problem is that the yen is at a 15-year high. It has gained almost 50% in value against the US dollar since mid-2007, making exports more expensive.
Earlier this week, the Bank of Japan set interest rates at just above zero.
