TOKYO (AP) _ Responding to calls to beef up Japan's defense following a firing of a North Korean rocket, Tokyo has come up with a plan to develop four spy satellites by 2002, a Japanese newspaper said today.

The Asahi newspaper, quoting unidentified government sources, said a draft showed that the satellite project will cost $1.3 billion.

The project still needs approval by the ruling Liberal Democratic Party before it can be included in the national budget, it said.

The Aug. 31 rocket launch was an acute reminder of Japan's vulnerability to missile attack.

With no missile-detecting system, Tokyo did not know that North Korea had fired a rocket that flew over Japan and crashed into the Pacific Ocean, until it received word from the U.S. military.

North Korea says it sent a satellite into orbit. U.S. officials concluded that it was a three-stage ballistic rocket with a range of more than 1,250 miles.

The North Korean rocket, believed to be a test of its new Taepo Dong 1, showed that North Korea could strike any part of Japan.