The expansion will render all 3- to 5-year-olds eligible for assistance, regardless of their parents' income, making preschools free for an additional 2 million children. Currently, 2.5 million children in that age group attend either nursery school or kindergarten in Japan.

The Abe government has put together a 2 trillion yen package -- around $17.5 billion -- for what he calls "revolutions in productivity and human resources development," promising programs such as free university education for students in low-income households.

Nearly 1.7 trillion yen in revenue expected from a consumption tax increase in October 2019 will finance the package, with the corporate sector contributing the remaining 300 billion yen.

Japan's consumption tax rate is scheduled to rise to 10% from 8% currently. As the higher rate will apply during only part of fiscal 2019, the free preschool program will cover only 5-year-olds in that fiscal year, before expanding to 3- and 4-year-olds the following year.

High-income earners who enroll children in a private kindergarten still will pay at least part of the cost. Japan already provides free preschool for low-income parents and will maintain the current method of paying the average fee, which currently stands at 25,700 yen a month.

Care for children up to age 2 will be free for households that make less than 2.6 million yen a year and are exempt from municipal residency tax. Nearly 10 billion yen will be earmarked to fund this effort.