Under diplomatic pressure from the United States and military threat from China, Taiwan today backed away from renunciation of the "one China" policy that has been the basis of its relationship with Beijing for decades.

The government of the self-ruled island continued to insist, however, that China treat Taiwan as an equal in any future negotiations -- a status President Lee Teng-hui has sought for nine months but one that Beijing is certain to find unacceptable.

Taiwan's move marked a retreat from what many Western diplomats viewed as a hardball political gamble by Lee, who declared on July 9 that China and Taiwan were effectively two states -- rather than parts of one nation moving toward eventual reunification. Taiwanese officials later elaborated, saying Lee's statement marked the end of Taiwan's adherence to the "one China" formula and that it was provoked by Beijing's aggressive efforts to isolate the island from the international community.

In Washington, President Clinton restated his administration's continued adherence to the "one China" principle, adding that "the understanding we have had all along with both China and Taiwan is that the differences between them would be resolved peacefully."

Earlier, Senate Foreign Relations Committee Chairman Jesse Helms (R-N.C.) praised Lee for standing up to Beijing. "By having the courage to state the obvious -- that the Republic of China on Taiwan is a de facto sovereign state -- the distinguished President Lee has created an opportunity to break free from the anachronistic, Beijing-inspired `one China' policy which has imprisoned U.S. policy toward China and Taiwan for years," he said.

Taiwan's chief government spokesman, Chen Chien-jen, told reporters today that Taiwan's cabinet had debated for days about the Chinese and English phrasing of Taipei's policy shift and had dropped some of the more controversial wording. Taiwan's formulation for dealing with Beijing is now on the basis of "special state-to-state" relations reflecting shared Chinese traditions, he said.

Chen said the cabinet decided to stop using expressions that have infuriated Beijing over the past few days. These include "two states," "two Chinas," "one China, two states" and "one nation, two countries." Beijing rejects the notion that Taiwan is a state, viewing the island of 23 million people as a renegade province. "We don't want to do anything to create confusion or misunderstanding," Chen said. "We think special state-to-state relations is good enough."

Chen said also that Taiwan has no plans to amend its constitution to reflect its stance -- an apparent response to a threat issued today by China's official newspaper that such moves would represent an "extremely grave provocation" and would make peaceful reunification of China and Taiwan impossible.

Hints that Taiwan was considering backing away from its policy shift came Tuesday when Lee used the expression "one China" in his first public statement since he dropped the initial diplomatic bombshell on July 9. The backtrack came on a day when Taipei suffered a major diplomatic defeat, as Papua New Guinea, which had maintained relations with Taiwan for just 16 days, switched its recognition back to China. Only 28 countries now recognize Taiwan; more than 160 recognize China.

Taiwanese analysts said that domestic political considerations were a major factor behind Lee's July 9 announcement. His Nationalist Party, which has ruled Taiwan since 1945, is facing a tough presidential election, and party veteran James Soong, running as an independent, is likely to take votes away from Lee's choice, Vice President Lien Chan. Lee announced the new policy, analysts said, in an attempt to embarrass Soong, who is believed to be more open to certain links with Beijing than Lee or Lien. They said Lee also may have believed that any threats from Beijing over the policy shift would benefit him and Lien -- not Soong.

With today's modification, Taiwan's policy becomes essentially a restatement of demands issued by Taiwan's top China negotiator, Koo Chen-fu, to Chinese President Jiang Zemin in Beijing last October: Taiwan must be treated as Beijing's equal in any political negotiations, and China must begin to democratize before reunification can occur.

Chen stressed that Taiwan still wants Wang Daohan, a senior Chinese envoy, to visit Taiwan, but the spokesman insisted that Beijing and Taipei negotiate with each other on the same footing. If Beijing accepts this condition, he added, Taiwan would be willing to begin talks on political issues, which it has hitherto rejected.

U.S. diplomats are due in the region shortly in an attempt to encourage both sides to cool down.