Shintaro Ishihara, who sparked crisis with China over disputed islands, says he aims to fix Japan's political and economic problems

The outspoken governor of Tokyo, Shintaro Ishihara, is to launch a political party, raising the possibility that a new rightwing force in Japanese politics will emerge in time for a general election due by next August.

Ishihara, an unabashed nationalist, sparked a diplomatic crisis with China in April when he announced plans to buy the Senkaku islands – which are claimed by both countries – and bring them under the control of the Tokyo metropolitan government.

The move forced Japan's prime minister, Yoshihiko Noda, to offer a rival bid to buy the islands from their private Japanese owners and prevent them from falling into Ishihara's hands.

Ishihara had hinted that he would develop the Senkakus, a move certain to infuriate China, which refers to them as the Diaoyu. In an apparent attempt to placate Beijing, Noda has said he will not build on the territory.

Ishihara said at a packed news conference on Thursday that he would resign as governor immediately and aimed to fix Japan's political and economic problems.

"I'm returning to national politics by forming a new party with like-minded colleagues," he said. "I will try to do nationally everything I have been striving to do for Tokyo." The new party's name has yet to be announced.

Ishihara, 80, who entered parliament with the Liberal Democratic party (LDP) in 1968, compared the country's bureaucrats to the shogunate regimes of feudal Japan. "We must fix the inflexible rule of the central government bureaucrats," he said.

It is not clear how much influence Ishihara's new party will have on national politics. His rightwing populism has won over Tokyo residents, securing him four straight terms as governor over the past 13 years, but other voters are wary of his provocative nature.

Opinion polls suggest the main opposition LDP could win the most seats in the lower house under its new leader, Shinzo Abe, but may have to look to smaller parties to form a coalition government. The governing Democratic party of Japan is expected to be punished over Noda's handling of the economy and tax increases due to be phased in over the next three years.

Ishihara has not ruled out joining forces with another new party formed by the rightwing mayor of Osaka, Toru Hashimoto. "There is momentum in Osaka, too, and I want to join hands [with Hashimoto's party]," Ishihara said. The Asahi Shimbun quoted a senior member of the minor Sunrise party of Japan as saying the group's five MPs would join Ishihara.

Ishihara is unrivaled in his ability to antagonise Japan's neighbours. He has described the Japanese army's slaughter of as many as 300,000 civilians in Nanjing in 1937 as a fabrication, and called on Japan to develop a nuclear deterrent against China and North Korea.

Last year he drew widespread criticism after describing the 11 March earthquake and tsunami, in which almost 20,000 people died, as divine punishment for the "egotism" of the Japanese people.

During his term as governor, he has made derogatory remarks about women and foreigners, and insulted Francophones by dismissing French as a "failed international language". In 2010 he suggested gay people were "deficient", after watching same-sex couples take part in a parade in San Francisco.

Yet in Tokyo at least, he has remained remarkably popular. He downed a glass of the capital's drinking water in public at the height of the Fukushima nuclear crisis to reassure residents about its safety, and has won plaudits from environmentalists for restricting diesel emissions.

He outlined his nationalist agenda in his 1989 book, The Japan that Can Say No, written with Sony's co-founder Akio Morita, which urged the country to end its dependence on the US for its security. A prizewinning novelist at 23, Ishihara wrote the screenplay for I Go to Die For You, a 2007 film that glorifies kamikaze pilots who flew on suicide missions towards the end of the second world war.

Like many Japanese conservatives, Ishihara wants to abandon the country's postwar constitution, which forbids the use of force as a means of settling disputes, and build a stronger, more active military. "There are several major contradictions that we hope the state itself will solve," he said on Thursday. "The biggest is the Japanese constitution, which was imposed by the [US] occupying army, and is rendered in ugly Japanese."

Japan does not have to hold a general election until next August, but Noda is under pressure to go to the polls early, having promised opposition parties he would do so in return for their support for a rise in the consumption tax.

• This article was amended on 26 October 2012. We mistakenly called Shinzo Abe Shintaro Abe. This has been corrected. It was further amended on 9 November 2012 to correct the spelling of the mayor of Osaka's first name. The original said Turo Hashimoto, when it should have said Toru Hashimoto.