The 64-year-old, whose hero is Margaret Thatcher, said that a "mountain of work" lay ahead to restore the fortunes of her ailing Liberal Democratic Party (LDP).

The LDP has governed Japan almost uninterrupted for decades but it has been haemorrhaging support as backing grows for smaller parties, including the anti-immigration Sanseito.

Takaichi, an arch-conservative who tempered her rhetoric in the LDP contest, will almost certainly be approved by parliament later this month as Japan's fifth prime minister in as many years.

"Together with so many of you, we have carved a new era for the LDP," Takaichi said at LDP headquarters after winning a run off vote against the telegenic and more moderate Shinjiro Koizumi, 20 years her junior.

"Rather than feeling happy right now, (I feel) real challenge lies ahead. I am convinced that there is a mountain of work we must tackle together, pooling our efforts," she said.

"We must all pull together across all generations and work as one to rebuild (the LDP)... Everyone will have to work like a horse," she said to applause.

Koizumi, son of a former premier and who was seen as more progressive on social issues, would have been Japan's youngest prime minister in the modern era and represented a generational change for the LDP.

He and Takaichi went into the run off after the moderate and highly experienced Yoshimasa Hayashi, dubbed "Mr. 119" after Japan's emergency phone number, was knocked out along with two other candidates.

Takaichi now faces a host of complex issues including an ageing population, geopolitical upheaval, a faltering economy and growing unease about immigration.

First, however, she will have to ensure that the LDP, which has governed almost non-stop since 1955, can rally voters again.

"The LDP must regain trust, and an overhaul is needed for us to start afresh," Koizumi had said in the campaign, calling the state of the party a "crisis".

- Immigrant 'invasion' -

Outgoing premier Shigeru Ishiba took the reins last year but his LDP-led coalition lost its majority in both houses of parliament and he threw in the towel.

One party on the up is Sanseito, which echoes other populist movements in calling immigration a "silent invasion" and blames newcomers for a host of ills.

Takaichi and Koizumi in the LDP campaign sought to appeal to voters attracted by Sanseito's messaging about foreigners, whether immigrants or the throngs of tourists.

Japan should "reconsider policies that allow in people with completely different cultures and backgrounds", said Takaichi.

Such alarmism from mainstream politicians is rare in Japan, where people born abroad make up just three percent of the population.

"I think tolerance in society towards foreigners is weakening," pensioner Kimiko Tamura, 66, told AFP in Kawaguchi, one of Japan's most multicultural cities.

Still, 33-year-old Nguyen Thu Huong, who arrived from Vietnam 14 years ago, said "differences in culture are difficult to learn... but Japan is a nice place to live".

- Abenomics 2.0 -

On the economy, Takaichi has in the past backed aggressive monetary easing and big fiscal spending, echoing her mentor, former premier Shinzo Abe.

But she tempered her stance on the campaign trail, and the regular visitor to the Yasukuni war shrine has also sounded more moderate on China.

Coming from the traditionalist wing of the LDP, celebrations that finally a woman is leading Japan may soon turn to disappointment.

Takaichi "has no interest in women's rights or gender equality policies," Yuki Tsuji, a professor specialising in politics and gender at Tokai University, told AFP.

"I too shall cast aside the idea of work-life balance. Work, work, work, work, work I shall," Takaichi said Saturday.