Japan's ruling Liberal Democratic Party is considering endorsing lawmakers who were punished for failing to report political funds to run as its official candidates in the upcoming general election, sources familiar with the plan said, in a setback for the party's new leader Shigeru Ishiba.

The plan could draw fresh criticism about the LDP's handling of the slush funds scandal that damaged voter confidence, despite Ishiba's pledge to revamp the party and restore public trust in politics. He became prime minister on Tuesday.

The Oct 27 election will be the first since the mishandling of political funds came to light in late 2023.

As the scandal deepened and criticism mounted, the LDP in April took action against 39 members whose unreported revenue totaled 5 million yen or more.

Of these, 34 received lighter punishments rather than being expelled, suspended from party membership or excluded from the party's endorsement list. An additional 45 were merely reprimanded by the party's secretary general, as their unreported amounts fell below the threshold.

The LDP is considering allowing such LDP members to run on the party's ticket if local chapters want them endorsed, according to the sources.

The mostly lower and upper house members of the LDP came from two powerful factions led by the late Prime Minister Shinzo Abe and the party's former Secretary General Toshihiro Nikai.

Ishiba, as LDP chief, is arranging for party executives to interview those from the Abe group to decide whether to endorse them or not, the sources said.

Ishiba, who was known to be a critic of Abe, previously indicated that he would hold those members to account and carefully examine whether to give them party endorsements.

As LDP chief and premier, Ishiba now faces the challenge of striking a delicate balance with conservative members to ensure a stable government.

This follows a split within the party between one camp that supported Ishiba and another that supported his rival, economic security minister Sanae Takaichi, who was backed by many in the conservative Abe group.

Among the five members who received heavier punishments, former trade minister Yasutoshi Nishimura and former LDP policy chief Hakubun Shimomura will not receive LDP backing due to their one-year suspension from party membership, but former Diet affairs chief Tsuyoshi Takagi's half-year suspension ended on Friday.

The other two have already been advised to leave the party.

Some 75.6 percent of respondents to a Kyodo News poll conducted Tuesday and Wednesday said they disagree with the idea of the LDP formally endorsing lawmakers implicated in the political funds scandal, underscoring the difficulty that the ruling party would face in securing support from the general public.