Taiwan's parliament has lifted a 50-year ban on direct trade and transport links with China, opening up routes between a handful of offshore islands and mainland China.

The bill, two years in the planning, allows direct shipping links between the islands of Quemoy, Matsu and Penghu and ports in south-east China.

The Nationalist Party - defeated by the pro-independence Democratic Progressive Party in Saturday's elections - had long banned such links, citing security concerns.

But the policy has loosened recently, under pressure from Taiwan's business community and the fact that Hong Kong and Macau, the chief transit points, have reverted to Chinese rule.

Correspondents say the timing of the bill's passage will also send a positive signal to Beijing, which is watching the island's stance toward China following the election.

'Fight to the end'

China's foreign minister, Tang Jiaxuan, warned the United States against interfering over Taiwan, which Beijing regards as a renegade province.

"If the US side is bent on engaging in confrontation, the Chinese side will take it on and fight to the end," he said.

"The question of Taiwan is China's internal affair."

Xinhua news agency quoted Mr Tang as telling the US to stand by its agreement to recognise Beijing as the sole legal government of 'One China', and to phase out arms sales to the island.

His comments followed a meeting with Richard Holbrooke, the US ambassador to the United Nations, in which they discussed Taiwan and human rights issues.

Mr Holbrooke said the talks had been constructive.

"I repeated that we stand for the same thing that five administrations stand for, the 'One China' policy, peaceful cross-strait dialogue, and the peaceful resolution of the problem."

Mr Holbrooke also held meetings with Chinese President Jiang Zemin and vice premier and foreign policy architect Qian Qichen.

The 'One-China' principle

His visit came after the Chinese President rejected Taiwan's calls for peace talks, saying that it must first accept reunification with China.

The Taiwanese president-elect Chen Shui-bian had earlier called for a peace summit with China following his victory in Saturday's election.

China repeated that any negotiations with Taipei would have to based on the recognition that Taiwan was a province of China and could never be an independent country.

"The 'One China' principle must first be recognised, and under this prerequisite, everything can be discussed," Mr Jiang said.

But Mr Chen said he was prepared to discuss all aspects of Taiwan's relationship with China, provided Beijing treated Taiwan as an equal and did not insist on its definition of the 'One-China' principle.