Japan's Prime Minister Fumio Kishida was grilled by lawmakers on Wednesday about a gathering of ruling party members at which scantily clad female dancers were reportedly told to use their mouths to receive cash tips.

Footage leaked from the event in November organised by a regional chapter of the Liberal Democratic Party (LDP) showed women in what appeared to be swimsuits dancing and sitting on participants' laps.

The women came from a troupe called Glamor Dancers and were obliged to use their mouths to receive banknotes hanging from those of the participants, media reports said.

One of the organisers, Tetsuya Kawabata, later sought to defend the event by saying that the presence of the "go-go dancers" were intended to ensure "diversity".

"We invited the dancers after studying from various viewpoints, including whether it matches the theme of diversity," Kawabata, deputy head of the local LDP youth wing, told broadcaster ANN.

"However, the excitement that ensued, particularly towards the end of the social gathering, exceeded my expectations," media quoted Kawabata as saying. He reportedly later resigned from the party.

The LDP's nationwide youth wing on Monday apologised and said that  two MPs who attended were stepping down from their posts in the Youth Bureau, but will remain party members and lawmakers.

The episode is embarrassing for the LDP -- which has governed almost uninterrupted for decades -- as it seeks to get more women into the male-dominated world of politics.

Kishida in September increased the number of women in his 20-strong cabinet to five, a joint record for Japan.

Grilled by opposition MPs on Wednesday about the scandal, Kishida said on Wednesday that the event "doesn't match the cabinet's goal of diversity".

"What my cabinet seeks is an inclusive society where all people feel the meaning of life with their dignity and diversity respected," local media quoted him as saying.

His government's approval ratings are at their worst level since the LDP returned to power in 2012 with voters angry about inflation and a string of other scandals, most notably one about kickbacks from fundraising events.

Kishida, in office since October 2021, is due to face a tough internal LDP leadership election battle in late 2024 ahead of national polls due by 2025.