The BOJ also kept its overnight call rate unchanged at zero to 0.1 percent, the level it has been at since December 2008,
Under the increased asset purchase program, the BOJ will purchase some 10 trillion yen in Japanese government bonds and Treasury bills, 0.1 trillion in commercial paper, 0.3 trillion in corporate bonds, 0.5 trillion in exchange traded funds and 0.01 trillion in Japanese real estate investment trusts.
The BOJ intends to complete the increased purchases by around the end of 2013.
Last month the BOJ expanded the asset purchase program by 10 trillion yen to 80 trillion.
Under the new framework to stimulate bank lending - the Stimulating Bank Lending Facility - the BOJ said in a statement that it would provide long-term funds of up to the banks' net increase in lending at a low interest rate, currently at 0.1 percent, to promote an "aggressive action and helping increase proactive credit demand of firms and households."
"There shall be no upper limit - unlimited - to the total amount of funds provided by the Bank under this facility," the BOJ added.
The BOJ's new lending facility is in addition to the bank's existing 5.5 trillion yen Growth-Supporting Funding Facility of which 3.4 trillion are outstanding.
In a joint statement with Japan's government, the BOJ and government stressed the need to overcome deflation and said that the BOJ "judges the price stability goal in the medium to long term to be within a positive range of 2 percent or lower in terms of the year-on-year rate of change in the CPI."
However, the bank still aims to achieve its goal of 1 percent inflation through monetary easing until it judges that goal to be in sight.
Once again, deflation has taken hold of Japan and in September consumer prices fell in at an annual rate of 0.3 percent, the fourth month in a row with falling prices.
The BOJ also said that "overseas economies have moved deeper into a deceleration phase" and Japan's economy has been weakening somewhat.
In the second quarter, Japan's Gross Domestic Product expanded by 0.20 percent from the first, for an annual growth rate of 3.2 percent, up from 2.9 percent in the first quarter.
"Going forward, there remains a high degree of uncertainty concerning Japan's economy, including the prospects for the European debt problem, the momentum toward recovery for the U.S. economy, the possibility of emerging and commodity-exporting economies making a smooth transition to the sustainable growth path, and the spreading effects of the recent bilateral relationship between Japan and China," the BOJ said, adding:
"Based on these economic and price developments, the Bank of Japan judged it appropriate to undertake further aggressive monetary easing policies in order to prevent Japan's economy from deviating from the path of returning to a sustainable growth path with price stability."
According to its October forecast from all its policy board members, the BOJ expects consumer prices to remain at -0.1 to 0.0 percent in fiscal 2012, down from July's forecast of +0.1-+0.4 percent, then rise slightly to a range of -0.1 to +0.6 percent in fiscal 2013 and then to increase between 2.2 and 3.0 percent in fiscal 2014.
Japan's real GDP is forecast by all policy board members to rise by 1.2 to 1.7 percent in fiscal 2012, down from July's forecast of 2.1 to 2.4 percent, then remain largely stable in fiscal 2013 at 1.0 to 1.8 percent growth and rise by only 0.1 to 0.8 percent in fiscal 2014.