Polls suggest the DPJ would be badly defeated if elections were held now.
Voters appear to be disappointed over the DPJ's inability to deliver promised change to Japan's stodgy politics and are upset with Noda's push to double the sales tax to 10 percent, a step Noda argues is needed to meet increasing social security costs as Japan's population ages and its national debt grows.
Noda, Japan's sixth prime minister in six years, played up his resolve to make tough decisions in a speech before Friday's vote, promising to "sweat with all of you to make a vigorous Japan together."
"The real reform Japan needs is decisive politics when we face issues that need to be decided," Noda told party members gathered in a Tokyo hotel.
Noda also pledged to push forward with the goal of making Japan a nuclear free society by the 2030s. The pledge appeared to be an attempt to show his government was committed to phasing out nuclear power even though his Cabinet on Wednesday backpedaled from an advisory panel's recommendation to eliminate nuclear power by 2040 in the face of opposition from pro-nuclear businesses and groups.
In addition to issues at home, Noda's government has been pressured lately by a territorial dispute with China over uninhabited islands in the East China Sea controlled by Japan but also claimed by China and Taiwan.
Many analysts see the main opposition Liberal Democratic Party winning the next election which must be called by next September although falling short of a majority. Analysts believe elections will most likely be held early next year.
Noda struck a deal earlier this year to gain support from the LDP and another opposition party for the tax hike and social security reforms in exchange for a promise to call an early election. But Japanese media have reported Noda wants to put that deal on ice because the LDP backed passage of a censure motion against him in the opposition-controlled upper house.
In a bid to show he can deliver results, Noda may demand the LDP's support on more bills before calling elections, said Steven Reed, a political science professor at Chuo University in Tokyo. He noted that voters have grown frustrated over the gridlock and political infighting that has dominated parliament in recent years.
"They want someone who can get stuff done," Reed said. "They want an end to immobilism. They want leadership. They want a unified party. They want a party that isn't falling apart every time they turn around."
The LDP, a conservative, pro-business party with a nationalist bent, is holding its own leadership election on Wednesday. The winner could become the next prime minister if the LDP comes out on top in the next elections.
Front-runners among the five candidates include former Prime Minister Shinzo Abe, ex-defense chief Shigeru Ishiba and party secretary-general Nobuteru Ishihara, the son of Tokyo's outspoken governor, Shintaro Ishihara, who started the latest territorial furor with his plan to buy and develop the disputed islands also claimed by China.
Vying against Noda in the DPJ leadership race were two former farm ministers, Michihiko Kano and Hirotaka Akamatsu, and a former internal affairs minister, Kazuhiro Haraguchi.