Washington had estimated the eight conventional submarines for Taiwan's navy could cost up to 11 billion US dollars, more than double the market price, a defense official told the paper.

If the differences over the cost could not be resolved, Taiwan's navy might switch to buying used submarines instead, the official said.

In reply to a query raised at the parliament, defense minister Tang Yao-ming reiterated the official line that procuring the eight submarines was a "deterrent" which Taiwan badly needed.

But Tang also sought to ease the price concerns.

"The defense ministry would by no means pay exorbitant prices. All the weapons to be purchased must not exceed international prices while they are required to meet our demands," he said.

US President George W. Bush approved the submarine sale in April 2001 as part of the most comprehensive arms sales to the island since 1992.

The deal, however, has progressed slowly as the United States has not built conventional submarines for more than 40 years.

An opposition parliamentarian said South Korea built three German-designed submarines for 367 million dollars each, India built three at 323 million per submarine and Pakistan constructed three at 317 million each.

"The prices quoted by the United States are outrageously high," the defense official said.

However, Taiwan would have to pay 20 percent more than the US tender if it insisted on building some of the submarines on its own, he added.

Taiwan's cabinet in September proposed to Washington that local technicians should be engaged in building the submarines to provide the state-run China Shipbuilding Corporation with the technical expertise.

Taiwan only had a budget of 150 billion Taiwan dollars (4.41 billion US) for purchasing the submarines.

Germany and Spain had reportedly declined to offer their designs for fear of offending China, which regards Taiwan as part of its territory to be reunified, by force if necessary.

The Netherlands had also turned down the deal, lawmakers said.

China and Taiwan split in 1949 at the end of a civil war, but Beijing has repeatedly threatened to invade the island if it declares independence.

WAR.WIRE