The draft bill, aimed at overriding the restrictions of existing laws governing official budgets, calls for the procurement of eight submarines, a modified version of Patriot anti-missile systems PAC-III and a fleet of anti-submarine aircraft over a 15-year period beginning in 2005.

United States President George W. Bush offered the sales in April 2001 as part of the most comprehensive arms package to the island since 1992.

Government spokesman Chen Chi-mai told reporters: "The Executive Yuan is highly concerned about the steady rise of military spending by the Chinese communist forces."

In order to finance the purchase, the Taiwanese government planned to sell land and stocks of state-run enterprises as well as issue government bonds, Chen said.

Taiwan's parliamentary speaker Wang Jin-pyng confirmed he would lead a delegation to the US in late June for the mega arms sales.

The visit "is related to arms sales", Wang said, without providing details.

A breakdown of the extra military budget was 144.9 billion Taiwan dollars for PAC-IIIs, 412.1 billion for conventional submarines, and 53 billion for anti-submarine aircraft.

But opposition parties reacted to the proposed special military budget by saying a big chunk of it would be a waste of taxpayers' money.

Parliamentarian Lu Hsiu-yen, from the opposition People First Party, said military experts had pointed out that such spending would do more to help the US arms industry than it would to help in meeting Taiwan's defense needs.

"What is more, given the financial difficulties, I think the public will oppose the arms sales," said Lu, a member of the parliament's defence committee.

Taiwan's approval of the special military budget came one day after the United States warned China over its arsenal of weaponry targeting Taiwan, including approximately 500 short-range ballistic missiles.

The US Defence Department warned in a report two days earlier that China was developing "credible military options" to prevent Taiwan from achieving independence, including tools to discourage the US from coming to the island's aid in a conflict with the mainland.

If equipped with adequate guidance systems, these missiles could destroy key Taiwanese leadership facilities, military bases and infrastructure with minimal advance warning, Pentagon analysts point out.

Some of these weapons are believed to be capable of hitting US military bases in Okinawa, Japan.

Taiwan has deployed three batteries of PAC-II missiles to defend its densely populated greater Taipei area.

Separately, the Taipei-based Chinatimes Express evening newspaper reported in a dispatch from Washington that Major General John Allen, in charge of Asia Pacific affairs in US Defence Secretary Donald Rumsfeld's office, would visit Taiwan in July, becoming the most senior active US military officer here in 25 years, in a trip likely to anger Beijing.

The US acknowledges Beijing's position that Taiwan is part of China and does not have official relations with the island.

However, Washington is bound by law to provide weapons to help Taiwan defend itself if its security is threatened and calls for peaceful settlement of the sovereignty dispute between Taipei and Beijing.

China, which split with Taiwan in 1949 at the end of a civil war, has repeatedly threatened to take the island by force should it declare formal independence.

WAR.WIRE