Abe, 52, a nationalist who entered office as Japan's youngest postwar premier, did not announce a date for his departure from office.

Word of Abe's resignation comes after his scandal-scarred government lost control of the upper house of parliament to the resurgent opposition. The LDP still controls the more powerful lower house, which chooses the prime minister.

Abe's resignation marks a rapid fall from power for a prime minister who came into office a year ago with ambitious plans to repair frayed relations with Asian neighbors, revise the 1947 pacifist constitution, and bolster Japan's role in international diplomatic and military affairs.

The prime minister, whose grandfather was premier and whose father was a foreign minister, initially met with success in fence-mending trips last autumn to China and South Korea.

But a string of scandals starting late last year quickly eroded support for Abe. Four Cabinet minister were forced to resign over the past nine months, and one — his first agriculture minister — committed suicide over a money scandal.

Abe also was facing a battle in parliament over extension of the country's refueling mission in support of the U.S.-led operation in Afghanistan.

Abe had said he would quit if he failed to win parliamentary passage of legislation extending the Afghan mission, in which Japanese ships refuel coalition vessels in the Indian Ocean.

"I have pondered how Japan should continue its fight against terrorism," Abe said Wednesday. "I now believe we need change. So Japan must continue its fight against terrorism under a new prime minister."

The plenary session of the lower house was to be delayed, media reports said, but an official of the lower house said she could not confirm that.

Opposition lawmakers said it was about time Abe resigned.

"It is irresponsible for him (to quit) after he gave a policy speech and was to face parliament questioning. He should have quit right after the upper house elections," Mizuho Fukushima, head of the opposition Social Democratic Party, told NHK.

The Treasury Inspector General for Tax Administration said that in 2004 the IRS received about 3.8 million miscellaneous income statements reporting some $150 billion in earnings that could not be computer-matched to a filed tax return because of missing or erroneous ID numbers.

The inspector general's office, which does oversight of the tax agency, looked at a sampling of these mismatched IDs and calculated that some 6,000 of these individuals had not filed 2004 tax returns despite having income statements indicating they earned more than $100,000. That translates into some $630 million in income, it said.

Much of the income involved compensation for nonemployees such as independent contractors reported on unusable miscellaneous income statements.

The office said that it looked at 620 income and wage statements with mismatched names and ID numbers reporting more than $60,000 in earnings. Using IRS automated data systems, it was able to manually match half of those to taxpayer accounts in IRS records.

It urged that Congress pass legislation, backed by the administration, that would require employers to verify the accuracy of ID numbers for the employees they hire. The office also recommended that the IRS do more to investigate high-dollar miscellaneous income and wage statements with mismatched names and IDs.

The IRS, in response, said it supported the legislation but concluded that the cost of manually tracking down mismatched names and IDs might exceed that of the benefits.

"The IRS's opposition to this recommendation is confounding," said Inspector General J. Russell George, adding that their audit showed that increased examination of statements would more than pay for itself in increased revenue.

Although the United States has banned the sale of toys made with lead paint since 1978, those products continue to seep into the domestic market.

The CPSC also said China will increase inspections of consumer products destined for the U.S. and assist the agency in tracing hazardous products to the manufacturer, distributor and exporter in China.

"If there is a product recall by a U.S. company that sourced the goods from a Chinese supplier, under the new agreement, China will now let the CPSC know if that supplier also sells its products to other U.S. importers," said Eric Autor, international trade counsel for the National Retail Federation, who attended the summit.

Chinese officials also said China would now require U.S. importers to obtain "export registration" for products that cause concern.

China will also ask importers to provide product designs to Chinese suppliers that are in compliance with U.S. safety standards and that U.S. importers provide reasonable prices to manufacturers to prevent Chinese producers from cutting corners and using cheaper unsafe materials.

Consumers Union, publisher of Consumer Reports magazine, said the agreement between the U.S. and China to eliminate the use of lead paint was "long overdue."

"China faces huge challenges in enforcing adherence to U.S. safety standards in products it exports to this country," Donald Mays, senior director of product safety with Consumers Union, said in a statement. "However, we are encouraged by the fact that U.S. toy manufacturers and retailers have indicated that they want federally mandated third-party testing of children's products."

China moved ahead of Canada as the leading source of imports into the United States, according to the most recent reading from the Commerce Department.

China also accounts for more than 80 percent of the world's toy production, primarily due to its low labor and raw material costs.

This year, Mattel (Charts, Fortune 500), the world's largest toymaker, faced three toy recalls that affected millions of its toys made in China. Mattel said those toys posed lead poisoning and choking risks to small children.

Another toymaker, RC2 Corp., recalled 1.5 million "Thomas & Friends" wooden railway toys in June that were also made in China over concerns that the surface paints on the toys contained lead.

"This is an important signal from the Chinese government that it is serious about working with CPSC to keep dangerous products out of American homes," CPSC's acting chairman, Nancy Nord, said in a statement. "We will be looking for meaningful cooperation on the ground, that means not just with the Chinese government but also with industry at both ends of the supply chain."

For its part, the CPSC has also come under fire from critics who said the agency is not doing enough to ensure that unsafe products do not reach store shelves.

Analysts point out that the CPSC currently doesn't have pre-market jurisdiction, which means that the agency can't test products for safety issues before they hit the market.

In the wake of the recent recalls affecting toys, toothpaste, tainted pet food and other products imported from China, some U.S. lawmakers are taking a closer look at U.S. manufacturers' and the CPSC's role in ensuring product safety.

To that end, on Wednesday, Mattel's CEO Robert Eckert is expected to testify before a Senate Appropriations subcommittee that oversees the Consumer Product Safety Commission about the problem of recalls of products made in China.

Separately, on Tuesday, Sen. Amy Klobuchar, D-Minn., introduced a bill to ban the use of lead in the manufacturing of children's toys, jewelry and other products.

Current voluntary guidelines set forth by the CPSC recommend additional testing of potentially unsafe products rather than an immediate recall of products found to contain lead.

"After a summer of recalls, it's time we make it crystal clear that lead has no place in our children's products. We must keep these unsafe toys off our shores and out of our stores," Klobuchar said in a statement.

The bill provides that lead in any children's product shall be treated as a "banned hazardous substance." It would set a ceiling for a trace level of lead at 0.04 percent per part for children's products, and 0.02 percent for jewelry.

If enacted, this legislation would be the first time standards for lead levels in children's products would be set by federal law.

While current law does not ban lead in toys, the Consumer Product Safety Commission has voluntary guidelines set at 0.06 percent.

Later in the day, the CPSC and Chinese officials held a panel discussion to assess what responsibility, if any, retailers have to ensure that the products they sell comply with U.S. safety standards.

"The CPSC acknowledges that product recalls pose a certain challenge to retailers," said NRF's Autor, adding that the agency said that under Federal statutes, manufacturers, including importers, are responsible for product safety.

"By the time products reach retailers, their best safety enforcement is to do random samplings. That is less than a perfect solution to the problem," Autor said.

Given that retailers generally are unaware of who the Chinese suppliers are to U.S. manufacturers, Autor said he too believes the burden falls on U.S. importers to best maintain product quality and safety controls.

The hearing will be before Judge Charles A. Porter, rather than Judge Gary Larson, who had accepted the plea. That could help Mr. Craig’s lawyers, who are arguing, in effect, that Judge Larson erred in accepting the plea.

It is not known whether Mr. Craig will appear, said Judy Smith, a spokeswoman for Billy Martin, a lawyer for Mr. Craig. Mr. Craig was arrested on June 11 by an airport police officer and pleaded guilty to misdemeanor disorderly conduct.

In exchange, prosecutors dropped a gross misdemeanor charge of interference with privacy. Mr. Craig has since said his plea was a mistake. He filed a request on Monday to withdraw it.

The jury pool was asked to fill out a lengthy questionnaire. One of the questions: "Do you regularly follow professional basketball or consider yourself a fan?"

U.S. District Judge Gerard Lynch also read aloud a list of names of possible witnesses, including Knicks players Stephon Marbury and Malik Rose.

During individual questioning, the judge dismissed one prospective juror, a coffee trader, after the man revealed his anguish over being fired from a job based on a co-worker's claim of inappropriate touching.

A maintenance man and Knicks fan was kept in the pool despite suggesting that game tickets were overpriced and that Thomas's track record as coach was poor. "I can speak freely? The team's not doing too well," he said as Thomas listened nearby.

Eight jurors were to be picked for a trial expected to last three weeks, meaning a verdict could come just before the Knicks open training camp.

Browne Sanders, a former Northwestern basketball star and married mother of three, wants reinstatement to her job as senior vice president of marketing and business operations. She's also seeking hefty damages after spending five years with the storied franchise.

The plaintiff contends she was fired in January 2006 "for telling the truth" while going through internal channels to stop the harassment by Thomas. Madison Square Garden, which owns the team, insisted her dismissal was because she "failed to fulfill professional responsibilities."

The 6th U.S. Circuit Court of Appeals judges ruled 2-1 that William Garner didn't understand his right to silence when he told police he would waive his Miranda rights against self-incrimination. He gave a taped statement to police, saying he set fire to a Cincinnati apartment with six children inside to destroy evidence of his burglary, according to court records.

Garner told police he thought the children would be awakened by the smoke and escape, according to court records. Only one child survived, and Garner, now 34, was convicted of five counts of aggravated murder in the 1992 fire, along with arson and other charges.

Judge Karen Nelson Moore, joined by Judge Boyce L. Martin, wrote that evidence showed that Garner, 19 at the time of the statement, was poorly educated and had low intelligence and other limitations directly related to understanding and comprehending his rights. Expert testimony also showed that Garner didn't understand the word "right" or his right to remain silent, their opinion stated.

"Thus, admission of his statement at trial was unconstitutional," the opinion stated.

Judge John M. Rogers dissented, saying police repeatedly asked and obtained assurance that Garner understood their meaning.

The judges granted Garner's request for habeas corpus, which protects inmates from unlawful imprisonment, and ordered his release in 180 days unless the state sets a new trial.

The state could ask for the case to be heard by all 14 appeals court judges or appeal to the U.S. Supreme Court.

Messages seeking comment were left with Attorney General Marc Dann's office.

Kyle Timkin, an assistant state public defender who argued Garner's case, said he was trying to reach his client, who is being held at the Mansfield Correctional Institution.

"Obviously, we're thrilled," he said. "It just basically affirms long-standing principles."

Shirley Williams originally filed the discrimination case after she and several other employees were laid off in October 2001. Layoffs occurred again in March 2003.

The plaintiffs accused the company of using a computerized performance management system to determine which employees to let go. The plaintiffs contended that the system unfairly singled out employees older than 40.

A Sprint Nextel Corp. spokesman said at the time of the settlement agreement in May that the company settled the case to move on with business.

A Sprint Nextel representative was not immediately available for comment on Monday.