China on Thursday rejected Philippine allegations of recent illegal military incursions into Manila's territorial waters.

"The reported 'incursion of Chinese ships' is not true," the Chinese embassy said in a statement.

The Philippine foreign department said Wednesday it had formally protested to the Chinese mission over recent activity in disputed waters of the South China Sea and Chinese plans to anchor an oil rig there next month.

Manila alleged Chinese People's Liberation Army naval vessels had unloaded building materials and installed a number of posts and a buoy last month near the Iroquois Reef and Amy Douglas Bank, both of which the Philippines claims.

However the Chinese embassy gave a different account.

"It's only China's marine research ship conducting normal maritime research activities on the South China Sea," it said of the Philippine reports of Chinese military vessels near the outcrops.

"China holds a clear and consistent position on the South China Sea issue," it added.

Manila said both were located between the major Philippine island of Palawan and the Spratly island chain in the South China Sea.

Brunei, China, Malaysia, the Philippines, Taiwan and Vietnam all lay claim to all or part of the Spratlys, which are thought to be rich in oil reserves.

The alleged incidents occurred just before a visit to Manila by Chinese Defence Minister Liang Guanglie last week, when he and his Filipino counterpart pledged to avoid "unilateral actions" that could inflame tensions in the area.

In March, the Philippines complained that Chinese patrol boats had harassed a Philippine oil exploration vessel in disputed waters near the Spratlys.

It subsequently filed a formal protest at the United Nations over China's claims to the Spratly islands and adjacent South China Sea waters.

Defence Secretary Voltaire Gazmin said Thursday the cash-strapped and badly equipped Philippine military would need more funds to be able to step up security in the South China Sea areas that are part of Philippine territory.

"We want to get more assets to be able to provide security in the disputed areas," Gazmin told reporters.

strs-cgm/mtp