The two prototypes, being produced by the Aerospace Industrial Development Corp (AIDC), are an improved version of the Ching-Kuo Indigenous Defence Fighter (IDF), the weekly said in a article to be published on Wednesday.

It said both the range and weaponry of the plane were intentionally limited under the US technology transfer programme that was crucial to the IDF's development in the 1980s.

"We are preparing for ground tests. We only manufactured two prototypes. If everything goes well we can put it into production after the air force approves the prototypes," Sun Tao-yu, AIDC chairman and chief operating officer, told Jane's.

The upgrade allows the IDF to carry an additional 771 kilograms (1,696 pounds) of fuel and includes an improved avionics suite, retrofitted electronic-warfare capabilities and new weapon systems.

The landing gear is strengthened to accommodate the added fuel and payload, but a plan to include dielectric radar-absorbing properties for a "stealth" fuselage was dropped due to concerns over weight.

The three-phase programme was launched in 2001 and recently saw completion of its second phase.

The first phase involved increasing the number of Tien Chien 2 (Sky Sword 2) air-to-air missiles from two to four, as well as integrating the new Tien Chien 2A anti-radiation missile and new Wan Chien (Ten Thousand Swords) cluster bomb.

The second phase involved upgraded mission computers; electronic counter-countermeasures; electronic warfare systems; an advanced 'identification friend or foe' system; and terrain-following and radar improvements.

Phase three will involve ground and air testing, with service entry scheduled for 2010 if the programme is approved.

AIDC produced 130 IDFs during the 1980s to replace Taiwan's ageing Lockheed F-104s and Northrop F-5s.

The island faces a potential military threat from China, which has vowed to invade if it moves towards formal independence.

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