In a televised National Day address, President Chen Shui-bian said China's own military build-up posed a threat to world peace, and urged it to withdraw nearly 1,000 ballistic and cruise missiles aimed at the island.

He also insisted Taiwan would continue to press for a referendum on joining the United Nations under its own name.

The military parade -- the first in 16 years -- came amid growing tensions between China and Taiwan, which split in 1949 after a civil war.

The most eye-catching weapons were the supersonic Hsiung-feng 3 ship-to-ship missile as well as the Tien Kung 3 weaponry, an anti-missile shield being developed under the Anti-Tactical Ballistic Missile (ATBM) project.

The defence ministry also for the first time allowed a glimpse of a locally developed unmanned surveillance plane that could be used to gather battlefield data.

But the island's first cruise missile, the Hsiung-feng 2E -- which because of its range could reach the Chinese mainland -- was not on display following reported pressure from Taipei's main ally Washington.

The missile's specifications are not available, but analysts say it has a range of at least 600 kilometres (375 miles) and could be launched on land or at sea.

That could bring airports and missile bases in southeastern China, as well as cities such as Shanghai and Hong Kong, within striking distance.

Defence Minister Lee said last week the military display was intended as "a kind of effective deterrent so the Chinese communists will be aware Taiwan is tough."

Amid tight security, US-made F-16 warplanes, French-made Mirage 2000-5s and home-grown fighters flew in formation as the parade got underway.

Hundreds of troops marched while elite marine and special operations units drove through the square around the presidential office in Taipei.

One unit that did not start was an elite squad of paratroopers, whose plan to land on the square using paragliders was cancelled due to poor weather.

At least two people invited to the event were taken away by security officers after they suddenly started shouting slogans against the president.

The opposition boycotted the event. Former Taipei mayor Ma Ying-jeou, who is campaigning as the presidential candidate for Kuomintang (KMT), instead attended a flag-raising ceremony.

The independence-leaning Chen has repeatedly accused China of provoking Taiwan, which Beijing regards as part of its territory awaiting reunification.

"With China's rapid rise and relentless military build-up, the 'China threat' is no longer confined to confrontation across the Taiwan Strait. In fact, it has already seriously impacted world peace," he said.

Chen accused Beijing of using "ever more belligerent rhetoric and military intimidation" which he said was aimed at "denigrating our nation, marginalizing it in the world, cultivating the perception that Taiwan is a local region of China, delegitimising its government, and undermining its sovereignty."

"Only the people of Taiwan have the right to decide their nation's future," he added.

"Taiwan and the People's Republic of China are two sovereign, independent nations, and neither exercises jurisdiction over the other."

However, Japan appealed for calm after the military parade.

"The two sides should resolve this problem through peaceful dialogue," chief government spokesman Nobutaka Machimura told reporters.

"It will not help to take actions that would strengthen military tensions," he said.

Chen, however, renewed pledges to hold a referendum on seeking UN membership in Taiwan's name at the same time as the March 22 presidential election, despite strong opposition from both Beijing and Washington.

Taiwan, under its official name Republic of China, lost its UN seat to China in 1971.

However, the United Nations has repeatedly knocked back Taiwan's bids for membership, including a 15th attempt last month.

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