Taiwan's electors yesterday ignored weeks of threats from Peking that a vote for the pro-independence leader Chen Shui-ban could lead to war, and made him their president anyway.

The victory of the leader of the Democratic Progressive Party ended more than half a century of nationalist Kuomintang (KMT) rule and ushered in a new and dangerous period in relations with China.

Mr Chen claimed victory after a tight race to the finish with James Soong, the rebel KMT apparatchik who cut loose last year to launch an independent presidential bid.

The result was a resounding defeat for the party which has monopolised power in Taiwan for more than 50 years. Mr Soong's challenge effectively split the KMT vote, letting Mr Chen race up the middle to victory while the official KMT candidate, Vice President Lien Chan, trailed well behind, despite spending a reported $60m (£40m) on his campaign.

"I feel very, very badly about this," Mr Lien said, in a gracious speech that took full responsibility for the defeat, while congratulating the man the KMT imprisoned 20 years ago. "I hope he will govern carefully."

The final official tally showed Mr Chen with 4.9 million votes, Mr Soong with 4.6 million and Mr Lien with 2.9 million. Turnout was 83 per cent.

Tens of thousands of Mr Chen's supporters thronged a huge stage outside his campaign headquarters, blowing plastic horns, cheering and singing. The result confirmed voters' disgust with the KMT's long history of corruption and gangster politics, bringing to an end one of the longest monopolies on power enjoyed by any party in the world. But it also signals a new era of uncertainty across the Taiwan Straits, considered Asia's most volatile flashpoint.

The Chinese government, in its first reaction to the result after weeks of bellicose rhetoric warning Taiwan against independence, said last night that the vote did not change the island's status as part of China.

Analysts in Taiwan said Mr Chen's victory would play into the hands of hardliners in Peking seeking a military confrontation. Occupied by the KMT after it fled Mao Tse-tung's Communists in 1949, Taiwan views itself as a sovereign, independent state while Peking sees the island as a renegade province that must be brought to heel.

"Most Taiwan residents cannot accept 'one country, two systems'," Mr Chen declared at a news conference after his victory, referring to the formula under which Hong Kong reverted to Chinese rule in 1997, followed by Macau last December. "We do not want to become Hong Kong number two, Macau number two."

Taiwan has rejected the formula, which would have promised the island a high degree of autonomy and insists that reunification is possible only after the mainland has embraced Western-style democracy.

Mr Chen, a former mayor of Taipei, will come under immediate pressure to remove a resolution in favour of independence from the DPP's charter, said Andrew Yang, secretary general of the Chinese Council of Advanced Policy Studies. If he does not, Taiwan can expect a military response, Mr Yang said. "A confrontation in the strait will become inevitable."

Even so, the mood on the streets of Taipei was one of celebration rather than fear. "Those wild men in Peking, they're all talk," said Chen Guang-cheng, a taxi driver. "They should calm down. They talk with a pen in the left hand a gun in the right hand."

Peter Fu, a 16-year-old English student, said that he thought the risk of conflict between China and Taiwan was minimal. "That would mean Chinese people fighting Chinese people. It's stupid. It won't happen," he said.

Mr Chen has stressed his commitment to peace throughout the campaign, backing away from earlier cries for independence in order to broaden his appeal. He has pledged not to simply declare independence, or name the country the Republic of Taiwan.

He has also enlisted the support of an esteemed scholar, the 1986 Nobel prize winner Lee Yuan-Tseh, who Mr Chen hopes will travel to Peking as Taiwan's special envoy.

President Clinton last night congratulated Mr Chen and said China and Taiwan should renew peaceful dialogue now that the island's voters have brought an independence-minded party to power. Washington summoned the Chinese ambassador last week to object to Peking's belligerent rhetoric, which included a promise that China was ready to "shed blood" if Taiwan moved towards independence.

In addition to the fraught external landscape, Mr Chen confronts a formidable set of domestic challenges. The formation of a coalition government is inevitable as he seeks support in a legislature dominated by the KMT. The political backdrop has been further destabilised by James Soong's defection, which has riddled the party's majority with factions and renegades.

Mr Chen also needs heavyweight support to confront a rotten, stagnant and stubborn bureaucracy resistant to change after more than 50 years of authoritarian, sclerotic rule.

Despite those hurdles, the vote was a victory for Taiwan's fledgling democracy and perhaps the most important milestone in the island's swift transformation from one-party rule into a pluralist society.

"Fortunately, we have throughout this election process respected the wish of the people and finished this election smoothly and successfully," Mr Lien said in his concession speech. "Our nation's democratic process has gone through a test of fire."