Prime Minister Junichiro Koizumi's administration retained control of Japan's more powerful legislative chamber in national elections Sunday but lost ground to the largest opposition party, whose leaders called their gains "historic."

In his first test at the polls since winning the country's top job more than two years ago, Koizumi's personal popularity brought fewer votes than some analysts had expected. They said the outcome could encourage opponents of his no-pain-no-gain economic reforms.

The returns also showed voters are increasingly split between just two parties, suggesting Koizumi's Liberal Democrats can no longer count on dominating a fragmented political opposition as they have for decades.

According to preliminary results announced by the media and political

parties, the three-party coalition led by Koizumi's Liberal Democratic Party held onto a majority with 277 seats, or 58 percent, of the 480-seat lower house of Parliament, after counting independents who joined the LDP bloc after the election. Before the election, it had 287 seats.

The coalition kept a tight grip on the chamber retaining control of all committees as well as the ability to pass legislation.

"We earned a mandate for our reform path," said Shinzo Abe, secretary-general of the Liberal Democrats. "We fulfilled our responsibility."

Some analysts, however, said the party's assessment might be optimistic. The opposition gains could embolden anti-Koizumi factions within the ruling party who oppose his belt-tightening policies. It might also force the prime minister to pause before moving ahead with an unpopular plan to send Japanese peacekeepers to Iraq.