The Taiwan government announced today that its military intelligence agency was involved in the murder last October of a Chinese-American author in California, an extraordinary admission of such activity inside the United States by an allied nation.

According to news services, the government said in Taipei that one or more military intelligence officers had been arrested and that Gen. Wang Hsi-ling, head of its military intelligence agency, was relieved of duty. The action came after statements in Taiwan by a gang member said to have planned the murder of Henry Liu, 52, in front of his home in Daly City, Calif.

Taiwan's announcement was in marked contrast to its 1982 denial of involvement in the death of Chinese-American professor Chen Wen-chen, a critic of the nationalist government's policies, who was found dead at National Taiwan University. Taiwan authorities said Chen committed suicide, but dissidents in the United States said he was murdered.

No motive for Taiwanese involvement in the Daly City murder was spelled out, but Liu had written several books and articles critical of the Nationalist party that governs the offshore Chinese island.

Investigators for both the U.S. Justice Department and Congress have expressed concern in the past about harassment of expatriate critics in this country by agents of friendly Asian governments, but today's admission in the Liu case was clear official confirmation of such activity.

State Department spokesman Alan Romberg said, "Obviously the involvement of members of an intelligence organization is a very serious matter. The Taiwan authorities appear to appreciate the seriousness of the case."

There was no indication whether today's sudden announcement meant a change in Taiwan's refusal to agree to extradite two criminal gang members now in custody who have been accused by the FBI and the Daly City police of participating in the murder. State Department officials have said Taiwan and the United States have no extradition treaty.

Today's Taiwan statement, according to Reuter, said: "The government is deeply shocked by the involvement of our intelligence officials in Liu's murder. The intelligence agency under the National Defense Ministry will be thoroughly investigated. The government has condemned violence as an expression of political views and is determined to severely punish those who have broken the law."

Taiwan's announced intention to investigate its officers echoes Poland's recent decision to prosecute four intelligence officers in the murder of the Rev. Jerzy Popieluszko, a dissident Catholic priest.

According to Daly City police, two men described as Asian in appearance, riding bicycles and wearing hooded sweatshirts, shot Liu twice in the chest and once in the face as he was loading the back of his car about 9:20 a.m. Oct. 15.

Liu's widow, Helen, said she was convinced that he was murdered because of his writings and not because of any extortion plot involving the two Bay Area gift shops she and her husband owned.

Daly City Detective Donald McCarthy said investigators assumed from the start that there was a political motive in the killing.

Liu had recently published a biography of Taiwan President Chiang Ching-kuo critical of the government and party that he headed. Van S. Lung, owner of the Yenching Palace restaurant in Washington and a friend of the victim, said Liu had told him that a representative of Taiwan had offered Liu $40,000 if he would cancel publication of his Chiang biography.

Taiwan officials said two members of the "Bamboo Gang" arrested in a government crackdown on organized crime were questioned about the murder and said government intelligence officers knew of it in advance. The two men -- Chen Chi-li, known as the "Duck," and Wu Tun -- were among those named by Daly City police as chief suspects. Police also named a third man thought to have returned to Taiwan, Tung Kuei-sen, known as "Little Tung."

A fourth man, David Yu, was arrested in San Gabriel, Calif., in late November and charged with driving the car that picked up the killers after they abandoned their bicycles near the murder scene. But San Mateo county prosecutors said there was not enough evidence to indict Yu and he was released. Daly City Detective John Warren said today Yu appears to have returned to San Gabriel but investigators are still looking into his role.

Warren said investigators are also looking for a tape recording reportedly made by Chen, the alleged leader of the murder team, giving details of the crime and its motive. A pro-Peking newspaper in Hong Kong, the Wen Wei Po, said Chen made the tape after returning to Taiwan and discovering that his government contacts would not support him. The tape allegedly accuses Liu, born in mainland China but a resident of Taiwan from 1948 to 1967, of ingratitude toward his former home.