Japanese Prime Minister Yoshihide Suga has told a meeting of ruling party executives he will declare a state of emergency for the three western prefectures of Osaka, Kyoto and Hyogo to stem the spread of COVID-19.
Responding to pressure from Tokyo and three neighbouring prefectures in eastern Japan, Suga last week declared a one-month state of emergency for that region until February 7.
But the number of coronavirus cases has also climbed in the west, prompting Osaka, Kyoto and Hyogo to seek a state of emergency too.
The government is finalising plans to do so on Wednesday, and could also consider adding the central prefectures of Aichi - home to Toyota Motor Corp - and Gifu, Kyodo reported, citing government sources.
Adding those five prefectures would mean a state of emergency for about half of Japan's population of 126 million people.
Japan's top government spokesman, Chief Cabinet Secretary Katsunobu Kato, did not confirm the report, saying only that the government would consider the measures for a "swift response" for the Osaka area.
Under Japanese law, the prime minister can declare a state of emergency, which gives local authorities the legal basis to ask residents and businesses to restrict movements and work.
Suga has been criticised for what many have called a slow, confusing and piecemeal response to the pandemic as infections hover near record highs.
About 79 per cent of respondents in a Kyodo survey published on Sunday said his decision to declare the emergency for Tokyo came too late.
Daily virus cases hit a record 7882 last Friday, for a tally of nearly 300,000, public broadcaster NHK said.
In a bid to help the struggling services sector, the government had offered generous subsidies to encourage citizens to travel domestically and dine out, only to pause the effort late last year as virus cases soared.
Now, it is asking residents of the Tokyo area to stay indoors as much as possible and urging bars and restaurants to close by 8pm.
With inbound tourism on hold, the hotel industry has borne the brunt of the economic pain. Last year, 118 hotels went under, a 1.5-fold rise from 2019.
Finance Minister Taro Aso said the government would offer one-off payouts of up to 400,000 yen ($A4980) to businesses supporting restaurants and bars that shorten hours, such as suppliers of disposable chopsticks and wet towels.
Maximum compensation for the restaurants themselves will rise by 50 per cent, Suga has said.