Sources close to Prime Minister Noboru Takeshita said Monday the embattled leader will resign soon and has asked Masayoshi Ito, an elderly member of Takeshita's ruling party, to take his place, news reports said.

Takeshita and Ito immediately denied the reports, which said Ito had turned down Takeshita's offer because of health reasons.Takeshita told reporters late Monday at his official residence the reports in Japan's largest circulation newspaper, the Yomiuri Shimbun, and the country's top wire service, the Kyodo News Service, were "totally unfounded."

Ito, 75, the chairman of the ruling Liberal Democratic Party's executive board, said, "It is not true. (Takeshita) isn't stupid enough to do that."

Takeshita met with Ito and other party leaders Monday morning to discuss a bribery scandal that has crippled Takeshita's administration.

The leaders did not announce details of the meeting, but press reports suggested it was a discussion of when Takeshita should resign.

Takeshita, who publicly refuses to step down despite a popularity rating below 4 percent, said he has made no changes in his plans for a nine-day trip to five Asian nations beginning Saturday.

Several leading members of Takeshita's own party have suggested he should resign, and all of Japan's major newspapers reported Monday he will resign when the 1989 budget is passed, which is expected in late May.

Opposition parties have increased the pressure on Takeshita by refusing to debate or vote on the budget, which was supposed to take effect on April 1, until concessions are made on the scandal.

Some political analysts believe Takeshita may have to promise to resign to win passage of the budget.

Ito, an eight-term representative from the northern state of Fukushima, is widely considered the leading candidate to take over if Takeshita is forced out of office.

Ito is one of the few leading members of the ruling party who has not been touched by the scandal and could step in as "Mr. Clean."

The bribery scandal, the worst scandal to hit Japan since the end of World War II, turned to Takeshita in the past three weeks.

Recruit Co., a major information and publishing conglomerate at the center of the affair, allegedly bribed politicians, including Takeshita, with discount stocks or political donations.