Japan's declining population has raised concerns about the country's economic growth potential and the government's ability to finance ballooning pension requirements.
The estimates, based on preliminary figures of births and deaths registered at Japanese municipal offices, showed the number of babies born in the country in 2006 was likely to have increased by 23,000 from a year earlier to 1,086,000.
This would mark the first increase in six years.
Japan's fertility rate, or the average number of children a woman bears in her lifetime, dropped to a record low of 1.26 in 2005, but has now turned upward, the Health Ministry data showed.
The ministry said in December Japan's fertility rate was expected to have increased to 1.29 in 2006. But it also said the rate was expected to start dropping again from 2007.
Demographers say a fertility rate of 2.1 is needed to keep a population from falling.
The data also showed the number of marriages in 2006 rose for the first in five years, with an estimated 732,000, up 18,000 from the year before.
Ministry officials attributed the increases in the number of births and marriages in part to an upturn in the economy and a recovery in incomes.
Japan, which has the world's highest proportion of old people and the lowest proportion of young people, has seen its population shrink since peaking in 2004.
By 2050, one in three Japanese is expected to be older than 65, while the population as a whole will decline, a government report has said.
The government has said unless steps are taken the shortage of children could hurt Japan's economic growth prospects and lead to higher social welfare costs for individuals.
REUTERS AKJ HS0915