Japan's cabinet on Friday approved an extra 12-trillion-yen ($156 billion) draft budget to finance measures to reconstruct tsunami-hit regions and help companies fight the strong yen.

The size of the extra budget, which still needs to be approved by the divided parliament, would make it the second-biggest ever following one compiled in 2009 after the global financial crisis.

Yukihisa Fujita, a vice finance minister, has said: "For the Japanese economy to get revitalised, this is an extremely important budget."

The package is the latest government effort to revive the economy, after a four-trillion yen special budget in May and another two-trillion-yen extra budget in July.

The government plans to fund the budget through spending cuts, sales of public assets, tax hikes and use of non-tax revenues as well as bond issuance.

But the series of extra budgets will exacerbate the nation's already dismal fiscal condition, with the overall budget swelling to a record 106.40 trillion.

The bulk of the third supplementary budget for the year to March is earmarked for rebuilding the northern region hit by the March earthquake and tsunami that left 20,000 people dead or missing.

A total of 355.8 billion yen would be used for decontamination and other measures to counter the worst nuclear crisis for 25 years after post-tsunami meltdowns at the Fukushima Daiichi plant.

The spending plan also includes two-trillion-yen financing for struggling businesses amid the yen's appreciation to historical levels.

It includes 500 billion yen in subsidies to companies which build factories and research facilities in Japan.

The government will also boost its firepower for currency intervention by lifting the limit on issuance of short-term debt by 15 trillion yen to 165 trillion yen for the current fiscal year.

The yen traded at 76.77 to the dollar in Tokyo morning trade Friday, compared with its highest level after World War II of 75.95 yen touched in August.

A strong yen reduces Japanese exporters' earnings when repatriated and pressures them to shift business overseas.

-- Dow Jones Newswires contributed to this article --