On Monday he told a news conference that his first priority was to deal with policy issues rather than call an election.
Ruling bloc lawmakers are reluctant to risk an election that could well see them lose the two-thirds majority that allows them to override upper house vetoes, if not their grip on power.
Tokyo stock market players, many of whom have already given up hope that Fukuda will implement bold reform policies, had little scope to ponder Japan's political saga.
"Political risk isn't something anybody's watching here. They're keeping their eyes out for companies' performances and with what happens to the global economy," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
Data released on Wednesday showed Japan's economic growth revised up to 1 percent for the first quarter but it may be a last hurrah for the world's No.2 economy as surging raw material prices and a global economic slowdown bite.
Some said political deadlock could worry markets if the stalemate persists after the July 7-9 Group of Eight summit.
The ruling bloc is considering countering the censure motion with a confidence vote in the lower house.
Speculation persists that Fukuda might step down after hosting the G8 summit in northern Japan or that the LDP may replace him with former Foreign Minister Taro Aso or some other potentially more popular rival, perhaps later this year or early in 2009.
A parliamentary official confirmed that the Democrats and two smaller parties had submitted the censure motion, which media said targeted Fukuda for alleged missteps including the introduction of an unpopular medical insurance scheme that forces some people aged 75 and over to pay more for health care.
The confusing system outraged many elderly voters, long a core LDP constituency, and the Democrats want to abolish it.
No censure motion has been adopted against a prime minister under the post-World War Two constitution, but in 1998 then Defence Minister Fukushiro Nukaga - who now holds the finance minister portfolio - was forced to resign about a month after the upper house approved a censure motion against him.
