The move comes as the tense stand-off between the two countries continues, with China's ambassador to the United States refusing to rule out force in the dispute.

Li Zhaoxing was quoted by the Associated Press news agency as saying that China hoped there could be a peaceful outcome to the dispute.

Taiwan is seeking support from the US and Japan as tensions with China rise

But he did not rule out military action and cautioned the United States against intervening, the agency said.

There have been increasing threats from China's official news media that Taiwan, which China regards as a renegade province, faces attack unless it drops its claim to statehood.

Taiwan's defence plans will go before the country's legislature at the start of its new session on 1 September, Premier Vincent Siew was reported to have announced.

Comments enraged Beijing

In another move which will further infuriate Beijing, Taiwan is also reported to want to join a regional missile defence system being researched by the US and Japan.

China is said to believe that any move to grant Taiwan protection under the scheme would constitute interference in its internal affairs.

China and Taiwan clashed in July when Taiwan President Lee Teng-hui said the two countries should manage their relations on a 'state-to-state' basis.

China is said to have mobilised all its forces

The comments enraged Beijing which believes Taiwan must eventually be reunited with the mainland, by force if necessary.

China's official news media has since issued a stream of threats in an attempt to crush what it sees as Mr Lee's plan to formalise the political separation between the sides.

Taiwan and China have operated independently since the 1949 civil war when Chiang Kai-shek's defeated nationalist forces fled to the island.

Defence analysts say missiles are one of the few effective threats China's massive but largely obsolete war machine can muster against Taiwan.

The US sent two aircraft carriers to back Taiwan in 1996 when China conducted missile tests near the island.

US could become involved

At a news conference at the Chinese Embassy in Washington, Li Zhaoxing was quoted calling the Taiwanese president a "troublemaker" and suggested he was trying to drive a wedge between China and the US.

Any escalation of tension between China and Taiwan could involve the US, because the 1979 Taiwan Relations Act commits the US to defend China against an attack from the mainland.

"We cannot rule out the force option," Mr Li was quoted as saying. "We want to prepare ourselves to stop any Taiwan independence or foreign intervention."