TOKYO (BLOOMBERG) - Japan's push to help revive its virus-ravaged economy with a "Go To" travel campaign has dealt a double blow to Tokyo, whose residents were cut off from promised travel subsidies and businesses are set to miss out on tourists.

The programme, promoting domestic travel by offering discount vouchers to boost an ailing tourism industry, starts on Wednesday (July 22) ahead of a four-day holiday weekend.

But Prime Minister Shinzo Abe's government last week decided to remove Tokyo residents after daily confirmed coronavirus infection cases hit records in the capital and stoked worries the plan could spread the virus.

Having staked its prospects for an economic recovery on domestic demand, Japan, which has relied heavily on Chinese tourists in recent years, has gone further than most countries by encouraging domestic travel after an almost 100 per cent decline in foreign visitors during the pandemic.

The resurgence of cases in major urban centres, however, highlights the challenges governments face as they try to balance rebuilding their economies with a constantly evolving health crisis.

Tokyo residents, who pay the biggest share of income taxes of any Japanese region, are angry over not receiving travel subsidies and have raised questions about the legality of their exclusion.

Businesses say cancellations have led to lost revenue and the government response is muddled.

Tokyo-based software engineer Takehito Fukui is caught in the mix.

He booked a 300,000 yen (S$3,886.50) four-day vacation to Okinawa for his family last month after the campaign was announced, expecting at least a third of the trip to be subsidised.

"I honestly feel like I've been swindled," Mr Fukui said in an interview.

Tokyo Governor Yuriko Koike said on Tuesday she may urge residents to avoid unnecessary travel during the upcoming four-day weekend that was originally scheduled to celebrate the start of the now-postponed Tokyo Olympic Games.

The total confirmed virus cases surpassed 10,000 in Tokyo after around 230 infections were found on Wednesday.

Following public criticism, Transport Minister Kazuyoshi Akaba said the government will pay for cancellation fees for trips to and from Tokyo booked between July 10 and July 17.

But the troubles with the programme have been viewed by many as another misstep in Mr Abe's management of the virus, which many have seen as, at times, being slow and haphazard.

About 60 per cent of respondents said they weren't happy with the government's virus response, a weekend survey by the Mainichi newspaper and the Social Survey Research Centre showed.