"What the premier said was just an assumption," Chen Wen-tsung, spokesman for the Presidential Office, told AFP.

"It was far from a departure from the existing government policy" that the decades-old sovereignty dispute be solved in a peaceful manner.

He renewed call for the resumption of dialogue, which Beijing called off in 1995 following then-Taiwan president Lee Teng-hui's unprecedented US visit.

Taiwan and the Chinese mainland split in 1949 at the end of a civil war.

A new political row erupted after Premier Yu at the weekend vowed to retaliate should China launch missile attacks against the island.

"You (China) have the capability to destroy me and Taiwan should have the capability to counter. You strike me with 100 missiles and I should at least strike back with 50," Yu told a gathering of government officials.

"You strike Taipei and Kaohsiung and I shall strike Shanghai. This way Taiwan will be safe," he added.

Opposition leader Lien Chan blasted the remarks, saying they could further fuel tensions across the Taiwan Strait.

But Lee Wen-chung, a parliamentarian from the ruling Democratic Progressive Party (DPP), said Taiwan should attain "a certain amount of offensive capabilities, which would enable Beijing to have second thoughts before it attacked Taiwan".

Referring to Taiwan's abortive efforts to develop surface-to-surface missiles, Lee, who is a member of parliament's defense committee, said: "Taiwan has the ability to develop ballistic missiles that could hit the mainland although there are still some barriers to overcome."

Taiwan in 1980 quietly launched a programme codenamed "Tien Ma" (Sky Horse) aiming to develop surface-to-surface missiles with a range of 1,000 kilometers (600 miles), Lee told AFP.

Taiwan was forced by the United States to scrap the half-completed programme for fear of escalating tensions in the region, he said.

China has strengthened its vow to take Taiwan by force after President Chen Shui-bian from the pro-independence DPP won re-election in March.

Taiwan's cabinet on June 2 approved a special budget of 610.8 billion Taiwan dollars (18.02 billion US) to buy weaponry from the United States over a 15-year period.

It needs final approval by parliament.

The arms package -- offered by US President George W. Bush in April 2002 -- calls for the acquisition of eight diesel-powered submarines, a modified version of the Patriot anti-missile system and a fleet of anti-submarine aircraft.

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