The trip by the US military group, which was set to arrive in Taipei two weeks ago to discuss the massive arms sales plan, was cancelled on the eve of their departure, the China Times said, without identifying the source.

"An evaluation showed it was not a good time for the visit before a consensus can be arrived at here," the source was quoted as saying.

"The arms sales must be handled carefully, or it might cause unnecessary problems," the source added.

The defense ministry declined to comment on the report.

The government has recently faced rising calls to spend more on relief for central Taiwan after it was devastated by floods sparked by a typhoon in early July.

Taiwan's cabinet on June 2 approved a special budget of 610 billion Taiwan dollars (18.2 billion US) to buy advanced weaponry amid tensions with China.

The draft budget, pending parliament's final approval, covers eight submarines, a modified version of the Patriot anti-missile system PAC-III and a fleet of anti-submarine aircraft over a 15-year period beginning 2005.

But some critics have said Taiwan cannot afford the massive spending spree, while others say the new weaponry will not be delivered in time to help the island fend off a possible attack from China in coming years.

The report came three days after Chinese Foreign Minister Li Zhaoxing told the commander of US forces in the Pacific Admiral, Thomas Fargo, that military exchanges with Taiwan must stop, given the "seriousness" of the standoff.

Beijing objects any arms sales to Taiwan, which it regards as part of its territory waiting to be reunified by force if necessary.

Since the March re-election of Taiwan's pro-independence president Chen Shui-bian, Beijing has ratcheted up its rhetoric, reiterating its vow to take the island by force should Chen move it towards formal independence.

WAR.WIRE