"The first sample vehicle was finished early last month and a series of tests have kicked off," the United Daily News said.

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

Military experts said if the report is verified, it would suggest that mobility has been given top priority while the army weighs its armaments plan.

In a military reform plan that ended in 2001, the Taiwanese military cut its troop numbers but reinforced their mobility and firepower in the face of what is perceived as a growing Chinese military threat.

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

The Ministry of National Defense declined to comment on the report.

The daily said the first models, which is similar in design to the French-made Piranha armoured vehicle, would be completed in February.

The new armoured vehicles would replace some 700 vintage M-41 tanks, while M48-Hs and M60-A3s would remain the backbone of the army's tank force, the paper said.

An unnamed army general, however, was quoted by the paper as saying that the US-made M1-A2 Abrams heavy tank is on the army's shopping list.

Washington has remained the leading arms supplier to Taiwan since switching diplomatic recognition from Taipei to Beijing in 1979.

US arms sales to Taiwan are guided by the 1979 Taiwan Relations Act, which charges the United States with providing the island with the means to defend itself.

WAR.WIRE