The Taipei-based China Times cited defense sources as saying the military-run Chung-Shan Institute of Science and Technology had conducted "more than one" test-firing for the new missile after a decade-long development.

It said the first test was held in November in southern Taiwan, following several failures in the past two years due to engine problems.

Hsiung Feng III is believed to outperform China's Russia-made SS-N-22 Sunburn supersonic anti-ship missile, the report said.

It said the missile, with a range of 300 kilometers (186 miles), was likely to be deployed along Taiwan's eastern coast or offshore islands.

The defense ministry declined to comment on the report.

According to a report in Jane's Defense Weekly last year, Hsiung Feng III's propulsion system compromises a ramjet engine with a solid-fuel rocket booster.

The supersonic vehicle can be fitted with a variety of guidance systems and function as an anti-ship, land-attack or anti-radar missile.

Taiwan is striving to boost its missile defense capabilities to counter the military threat from China, which officials said is targeting the island with some 600 ballistic missiles.

In June, the cabinet approved a special budget of 610.8 billion Taiwan dollars (18.2 billion US) to purchase weaponry from Washington over a 15-year period starting in 2005.

The arms package, pending final approval by parliament, includes eight conventional submarines, a modified version of the Patriot anti-missile system and a fleet of anti-submarine aircraft.

The massive budget proposal has stirred heated debate on the island as critics said the spending could further provoke China and heighten cross-strait tensions.

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