Taiwan's outgoing President, Lee Teng-hui, announced on Sunday he would step down as chairman of the ruling Kuomintang (KMT) party.

The decision, which will take effect in September, came as police clashed with more than 1,000 protesters outside the president's home.

We will strengthen our organisation and join forces with the public

KMT spokesman

Police used water cannon and baton charges against the supporters of defeated independent candidate James Soong who blame Mr Lee for splitting the KMT vote after Mr Soong's expulsion from the party.

The victory of the opposition Democratic Profgressive Party (DPP) candidate ended 51 years of KMT rule.

A KMT spokesman, Huang Huei-chen, said Mr Lee had ordered the formation of a committee to select a new party leader in September.

"To show our determination for reform after the major election setback, we will form a reform committee to strengthen our organisation and join forces with the public," he said.

Blamed for defeat

President Lee, 77, has been in power since 1988 when he became the first native-born Taiwanese leader of the modern era. In 1996 he was re-elected by popular mandate, making him Taiwan's first demoratically-elected president.

President Lee failed to inspire KMT supporters

But many people are blaming Mr Lee for the pre-election split in his party, which led to KMT voters being faced with the official candidate Lien Chan and expelled former lifelong party member James Soong.

Mr Soong, carried many prominent KMT figures with him, easily beating Mr Lien and running president-elect Chen Shui-bian a close second in Saturday's poll.

On Sunday, Mr Soong announced he would form his own party.

"We will forge the views of the majority Taiwanese and turn them into the truly stabising power of Taiwan," he said.