SEOUL, May 9 (Reuters) - South Korean President Yoon Suk Yeol said on Thursday his government's efforts to improve people's lives had fallen short, conceding a crushing election defeat for his ruling party last month reflected voters' assessment of his two years in office.

As part of a major policy push, Yoon also said a new government ministry would be created to address the country's record low birth rate and fast-ageing society.

"We will utilise all available national capabilities to overcome the low birth rate, which can only be said to be a national emergency," he said in opening remarks delivered from his office, behind a plaque which read "The Buck Stops Here."

Yoon's comments in his first news conference in 21 months come after the heavy defeat of his People Power Party in an April 10 vote, which prompted calls for a change in his leadership style and policy direction to salvage a presidency not yet at the halfway point.

"I think it reflects the public's evaluation of my administration's work is far short of what is needed," Yoon said when asked about his People Power Party's election defeat.

Yoon, who won the presidency in 2022 by a margin of less than one percentage point, has seen his support ratings plunge to a low of 21% in one public opinion poll.

He has pledged to communicate better with the public and parliament, as some analysts warned that the poll outcome meant he had already slipped into lame duck status.

The president pushed back on opposition parties' demand for a special prosecutor to investigate alleged improper conduct by the first lady, who was captured in a video that became public in November accepting a pricey bag as a gift in 2022.

While First Lady Kim Keon Hee's behaviour had been unwise, the call by the opposition was a political attack, he said.

The first lady has not been seen in public since Dec. 15, reflecting a view by some analysts and even some members of Yoon's party that she has become a political liability for the president and his PPP.

The creation of the ministry to address a fast declining and ageing population comes after the country's fertility rate, already the world's lowest, continued its dramatic decline in 2023, as women concerned about career advancement and the financial cost of raising children decided to delay childbirth or to not have babies.

The average number of expected babies for a South Korean woman during her reproductive life fell to a record low of 0.72 from 0.78 in 2022, data from Statistics Korea showed.

That is far below the rate of 2.1 per woman needed for a steady population and the rate of 1.24 in 2015 when concerns about issues such as housing and education costs were lower.