A Hsiungfeng II ship-to-ship missile, designed with a range of 150 kilometers (90 miles), was launched from the 170-tonne vessel on waters off the Li Tse Chien beach in Ilan county, northern Taiwan.

The navy plans to build 30 such missile boats under the "Kuanghwa Six Project."

Analysts said the boat, designed to reduce the reflection of radar waves, may be able to "passively" receive intelligence collected by other Taiwan warships and enable the fleet to launch missile blitzes against targeted enemy warships without exposing their location.

Each missile boat, designed to cruise at a maximum speed of 33 knots, will be armed with four locally-made Hsiungfeng II missiles.

The fleet is to replace dozens of aging 50-tonne Seagull missile boats, each of which is fitted with two 40-kilometer range Hsiungfeng I missiles.

Vice Admiral Hsu Chu-sheng had said the new ships will play a critical role in the next few years when the military balance between Taiwan and China is expected to tip towards Beijing.

The rehearsal saw Super Cobra attack helicopters, F-5E fighters, rockets and French-built Lafayette frigates mobilized in a scenario under which Taiwan forces jointly crushed the landing attempts of the enemy.

The exercises, codenamed "Han Kuang 19" (Han Glory), will be presided over by President Chen Shui-bian on September 1, the defense ministry said.

The wargames were scheduled for mid-May but were postponed due to the outbreak of the Severe Acute Respiratory Syndrome (SARS).

China has repeatedly threatened to invade Taiwan should the island declare formal independence. Taiwan and China split in 1949 at the end of a civil war.

WAR.WIRE