Japanese Prime Minister Yoshiko Noda has announced a compromise deal on a controversial sales tax bill.

The agreement was reached in a meeting between Noda and the leaders of the main opposition Liberal Democratic Party and New Komeito party. Noda said they agreed to hold a general election soon after passing the sales tax and social security reforms. The bill intends to double the sales tax rate to 10 percent by 2015, to tackle the nation's swelling social security costs.

Opposition parties had threatened a no-confidence motion and a possible parliamentary paralysis over it. They have been piling pressure on Noda to make a clear commitment to dissolve the lower house for a general election, in exchange for backing the bill.