TAIPEI, TAIWAN, DEC. 25 -- Taiwan will formally end its state of war with China before May, removing an obstacle to closer ties with Beijing and promoting democratic reform on the island, President Lee Teng-hui said today.

But in a sign of continuing pressure on Lee's government, about 10,000 supporters of the island's small opposition party marched through Taipei's financial district to demand even swifter change.

Waving flowers, the demonstrators -- including students, farmers and human-rights activists -- packed Taipei's main commercial thoroughfare. Lu Hsiu-yi, an opposition member of parliament, said Lee's announcement was "a good sign" but that "the beginning of reform is no guarantee of real reforms."

Lee, in a speech to the National Assembly marking Taiwan's Constitution Day, said the Nationalist government would rescind a 42-year-old emergency declaration issued during the Chinese civil war and would complete constitutional reform.

"We hope that in the shortest period of time, that is to say before May next year, we will, according to the law, declare an end to the period of Communist rebellion," he said.

Provisions under the declaration, issued just before the Nationalist government lost the civil war and fled to Taiwan in 1949, give wide-ranging powers to the presidency and freeze in office hundreds of aging legislators elected in China.