A top Taiwanese official said today that the self-governing island would scrap the "one China" policy that has framed its relationship with Beijing for years, precipitating an angry warning from China that Taipei is "playing with fire."

Mainland Affairs Council chairman Su Chi, the senior Taiwanese official on links with China, declared that the island's ties with China constitute "special relations" between two Chinese states, adding that "we feel there is no need to continue using the 'one China' term."

Su's remarks followed comments by Taiwanese President Lee Teng-hui, published Saturday, in which he said that relations with China should be considered on a "state-to-state or at least special state-to-state" basis.

The comments by Su and Lee prompted outrage in Beijing, where adherence to the principle that both China and Taiwan are "political entities" within "one China" has served as the foundation for talks between China and Taiwan that Beijing says should lead to the ultimate reunification of the two.

China's Foreign Ministry said that Taiwan's decision "marks an extremely dangerous step" and that the island's leaders should "rein in at the brink of the precipice." China's senior negotiator with Taiwan said there is now no basis for going ahead with talks.

The new Taiwanese policy stops short of declaring formal independence from China, which Beijing has repeatedly declared would be met with military attack. But the language used today by China--which considers Taiwan a renegade province--was some of the harshest since 1996, when China conducted missile tests near the island of 21 million following a controversial trip to the United States by President Lee. At that time, the United States sent 16 warships to the area to show its opposition to the use of force by China against Taiwan, but it later urged the Taiwanese not to provoke China by declaring independence.

Concerned about the escalation of rhetoric between Taipei and Beijing and eager to avoid being dragged into a confrontation between the two, the Clinton administration urged the two sides today to "engage in meaningful, substantive dialogue." State Department spokesman James Foley said that U.S. policy supporting peaceful talks aimed at "one China" has not changed.

For outsiders, the conflict over the "one China" terminology may seem like a mere dispute over semantics. But politicians on both sides of the Taiwan Strait see language as a key battleground in their 50-year standoff, which began when the U.S.-backed Chinese Nationalist Party and its supporters fled to Taiwan following their defeat by the Communists in 1949, and which has intensified under Lee, Taiwan's first democratically elected president.

While in Beijing last November for the highest-level talks with Beijing since 1949, Taiwanese billionaire Koo Chen-fu, chairman of Taiwan's semi-official Straits Exchange Foundation, said Taiwan would discuss reunification only if China transforms itself into a democracy and if Taiwan is treated as an equal negotiating partner. Today's move by authorities in Taiwan appeared to be part of an effort to strengthen this claim of equality.

Lee most recently angered China when he argued in a book that "Greater China," including Taiwan and Hong Kong, should be broken up into seven regions and governed as a federation. China's Communist rulers are also incensed at talk on the island that Taiwan may someday be included under an American missile shield.

Su Chi said Taiwan's "disappointment" with Beijing led to today's assertion. "We have shown our goodwill by calling ourselves a political entity under a 'one China' policy, but the Chinese Communists have used this policy to squeeze us internationally," Su said.

China's Foreign Ministry declared: "We hereby warn Lee Teng-hui and the Taiwan authorities not to underestimate the firm resolve of the Chinese government to safeguard state sovereignty." Reunification "will not possibly be procrastinated forever."