"The army has made a breakthrough in the acquisition of expertise on the research and development of a new eight-wheeled armoured vehicle under the 'Yun Pao' (Cloud Leopard) project," defense ministry spokesman Huang Suey-sheng told reporters.

Major General Ho Chiang-hai also denied a report that the army was lukewarm about purchasing the locally developed vehicle and intended to buy combat vehicles from the United Defense Corporation of the United States.

The local model "should be the army's only option," he said.

Ho said the army has completed several prototypes to be subject to field testings and modification before mass production begins in 2006.

Research and development on the armoured vehicle's variants, including surveillance and mortar-carrying designs, he added.

The United Daily News said the new armoured vehicle fleet, which is similar in design to the French-made Piranha armoured vehicle, would be used to replace the army's existing armoured vehicles and some 700 vintage M41-tanks, while M48-Hs and M60-A3s would remain the backbone of the army's tank force.

It said the weapons procurement project could cost the army up to 36 billion Taiwan dollars (1.06 billion US).

The completion of the eight-wheeled prototype marked an end to a long-standing debate in the army over whether the next generation of armoured vehicles should be tracked or wheeled, it said.

Military experts said the choice would suggest that mobility has been given top priority while the army weighs its armaments plan.

China has repeatedly threatened to invade Taiwan should the island declare formal independence.

WAR.WIRE