Aso, whose popularity has slumped in recent surveys, saw his Liberal Democratic Party lose its majority Sunday in the capital's metropolitan assembly to the Democrat Party of Japan.
Aso said Monday he would dissolve the lower House of Representatives, which his coalition controls, for a general election at a time of his choosing, Kyodo news service defeated. Other reports said Aso might take that decision as early as this week, setting the stage for an August election.
Aso's Liberal Democratic Party lost the majority in the 127-seat Tokyo metropolitan assembly. The opposition DPJ emerged as the majority party with 54 seats against 38 for the LDP and 23 for the New Komeito party, the report said.
''Although it was a local election, we must receive this outcome solemnly as a ruling party,'' Chief Cabinet Secretary Takeo Kawamura told reporters, Kyodo said. "But the outcome does not immediately bring into question Prime Minister Aso's responsibility.''
The Kyodo report said the Tokyo assembly setback could lead to moves within the LDP to hold a party presidential election to replace Aso prior to the elections which must of held by October.
The DPJ victory was seen as providing the opposition party more momentum in its effort for a change of government.
''The Tokyo race was affected seriously by confusion in the national political arena. The prime minister bears a heavy responsibility. I would like him to make a wise decision," Hidehisa Otsuji, who heads an LDP caucus, was quoted as telling reporters.