Japan's lower house on Thursday approved a 12.1 trillion-yen ($156 billion) draft budget to finance post quake reconstruction and boost an economy hit by slow global growth and a strong yen.

The third extra budget will now be deliberated in another parliamentary chamber, which is expected to approve it later this month.

The package, which would be the second-biggest ever following one compiled in 2009 after the global financial crisis, is the latest government effort to revive an economy reeling from the impact of the March earthquake and tsunami.

The budget comes in the wake of a four trillion yen package in May and another two trillion yen in July.

Prime Minister Yoshihiko Noda suggested earlier Thursday that he would pursue a fourth extra budget to help disaster victims repay housing or other loans and boost assistance for farmers.

If Japan draws up a fourth extra budget it would be the first time since 1947 when the country struggled to rise from the aftermath of World War II.

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.

Part of the budget 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 in financing for struggling businesses amid the yen's appreciation to historic levels against the dollar.

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

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.