"The peaceful status quo has been altered ... the present situation arouses concerns for war," Hsieh told legislators.

He said Beijing had misjudged Taipei's determination to safeguard its democracy, as angry Taiwanese lawmakers decapitated paper effigies of Chinese President Hu Jintao and Premier Wen Jiabao.

The Taipei government has demanded Beijing "sincerely apologize to the Taiwanese people for their grave mistake."

China's parliament passed the legislation Monday, giving the military the legal basis to attack Taiwan if it moves towards independence.

Undeterred, Beijing lashed out at the island for trying to "mislead," "hoodwink" and "distort" its citizens out of ulterior motives.

"It's a pure attempt to mislead and distort out of ulterior motives," an unnamed spokesman of China's Taiwan Affairs Office was quoted as saying by state-controlled Xinhua news agency.

"The objective is to hoodwink the Taiwan compatriots and the world opinion, again stir up confrontation in the Taiwan Straits, and seek an excuse for the Taiwan independence forces to create trouble," he said.

At the same time Wang Zaixi, vice minister of China's Taiwan Affairs Office, refused to say what specific moves by the island would warrant China to respond with "non-peaceful means" as stipulated in the law.

"For a law, I do not think it's possible or necessary for us to make examples concerning future complicated specific situation," Wang said.

With China bolstering its military capabilities and cross-Strait tensions growing, alarm bells have been ringing in the United States which warned the "unfortunate" law endangered regional peace and stability.

"We view the adoption of the anti-secession law as unfortunate. It does not serve the purpose of peace and stability in the Taiwan Strait," White House spokesman Scott McClellan told reporters.

The issue is expected to be high on US Secretary of State Condo-leezza Rice's agenda when she visits China on Sunday.