TOKYO, July 24, Reuter - The message from Japanese voters to the ruling Liberal Democratic Party (LDP) was clear: adapt or die.

The party which has guided Japan to its present position as economic superpower during its 34-year unbroken hold on government suffered a humiliating defeat in Sunday's election for the Upper House of parliament.

On Monday, Prime Minister Sosuke Uno announced his decision to resign to take responsibility for the disaster, but if the party isn't careful its troubles could just be beginning, political analysts say.

The LDP is on the defensive after a year of damaging scandals which have implicated virtually the entire LDP leadership, while the opposition Japan Socialist Party (JSP), once dismissed as completely ineffective, is surging forward.

The LDP now must quickly find a new leader and put the financial and sex scandals of the past year behind it by convincing the country it is serious about cleaning up its act.

Time is running short and if it fails the one-party rule of the past 34 years could be replaced by an effective two-party system.

Political analysts say the party may call a general election for the more powerful Lower House as early as October. If so, it will face an invigorated opposition, eager to capitalise on its gains in the weekend polls.

"The LDP has had a hardening of the arteries in the past 15 years," said Kent Calder, a political scientist from Princeton University. "They'll find it difficult finding a really attractive leader to make the generational shift."

There are no obvious candidates to succeed Uno, who took over only last month after his disgraced predecessor Noboru Takeshita searched for several weeks to find a suitable candidate untouched by scandal.

Uno was immediately hit by allegations of sexual misconduct and was viewed even before the election defeat as a liability to the party.

The good news for the LDP is that the huge swing to the opposition, particularly the Japan Socialist Party, is seen by analysts as basically an expression of anti-LDP feeling, rather than a vote of confidence in the opposition's ability to rule the country.

Many analysts are betting that voters who wanted to punish the LDP in this election will think twice before voting for the opposition next time.

"How they do in a general election depends on whether the new prime minister is able to carry out political reforms," said Kuniko Inoguchi, professor at Tokyo's Sophia University. "I think the LDP will do something."

The opposition, faced with its best shot at power in over 30 years, is still deeply divided over basic policy issues, including defence and nuclear power.

The JSP position has been vastly improved and the poor showing of other opposition parties will strengthen its hand in forthcoming talks on an opposition coalition.

LDP chances of regaining the initiative should not be discounted -- they have money and influence on their side and the innate conservativeness of the Japanese voter.

"The LDP is not going to meekly surrender power," said a report by the investment house Barclays de Zoete Wedd.