With more party members mulling an exodus to join other opposition parties ahead of the 2019 Upper House election, Otsuka made the proposal at the party meeting.
Lawmakers close to the matter said that other ideas that were floated included merging with other parties and changing the party’s name.
The ideas will be discussed in more depth at a party executive meeting on Wednesday.
The Democratic Party has been struggling to regain public trust for mishandling the earthquake-triggered nuclear disaster in Japan’s Fukushima Prefecture in March 2011 as a ruling party.
Former leader Seiji Maehara dissolved the party to allow its Lower House members to join Governor Yuriko Koike’s Party of Hope in the October general election.
However, many of the party’s Lower House representatives failed to secure their seats, forcing Maehara to resign.
For those Demoratic Party members who did not join the Party of Hope, many of them formed the Constitutional Democratic Party of Japan, and became the leading opposition party in the Lower House.