The military-owned Chungshan Institute of Science and Technology was scheduled to test fire the new defensive missile system at the Chiupeng base in Pingtung, southern Taiwan, this and next week, the United Daily News said.

An unnamed defense ministry official was quoted by the paper as saying Taiwan was "prepared for the reconnaissance of interested spy planes and ships".

Local military analysts said both China and the United States had been keeping a close eye on Taiwan's efforts to develop its high-tech weaponry, including the low-altitude anti-missile system, known locally as the ATBM.

A separate system, the ground-to-ground "Tien Ma" (Sky Horse) missile, with a range of 1,000 kilometers (620 miles), was secretly developed in the 1980s.

However, according to an unconfirmed report, the program was called off under pressure from Washington, the island's leading arms supplier despite its switching of diplomatic ties from Taipei to Beijing in 1979.

The United Daily News said the current tests were "part of a series of critical steps to verify the ATBM," which was based on Chungshan's Tienkung air defense system, already in service.

It said "the ATBM from the Chiupeng base would try to intercept drones launched from Chengkung," a coastal town in the southeastern part of the island.

Chungshan declined to comment on the report.

Late last year Taiwan's military authorities said they would put the ATBM into service in 2005.

The reports came as US President George W. Bush ponders whether to sell Taiwan destroyers equipped with the Aegis radar system and other high-tech weaponry, against the wishes of China.

China is bitterly opposed to the proposed Aegis sale, fearing the system could help bring Taiwan under the umbrella of a future US missile defence system, Theatre Missile Defense.

Beijing has repeatedly vowed to invade Taiwan should the island announce independence, prompting Taipei to seek more advanced weaponry.

Beijing views the island as part of its territory awaiting reunification after their split in 1949 at the end of a civil war.

Meanwhile, Taiwan's defense ministry announced Tuesday the air force was slated to inaugurate the wing of 60 French-made Mirage 2000-5 fighters on May 15.

"The inauguration of the Mirage unit would mark a milestone in the air force's bids to enhance its combat capability," defense ministry spokesman Huang Sui-sheng told reporters.

Taiwan took the last of the 60 Mirages it ordered from France in November 1998.

The United Daily News said the military held a rehearsal for the island's biggest wargame this year in Pingtung, with varied weapons mobilised including AH-1W Super Cobra attack helicopters, M-48H tanks, howitzers and motars.

The drill is slated for Friday.

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