US and Chinese officials had been closely monitoring the election, hoping the vote would result in better relations between Taipei and Beijing after eight years of friction with outgoing pro-independence president Chen Shui-bian.

Mr Bush congratulated Mr Ma, the opposition candidate of the Kuomintang (KMT) party, and reaffirmed Washington's 'one China' policy of recognising Beijing as the sovereign government.

'It falls to Taiwan and Beijing to build the essential foundations for peace and stability by pursuing dialogue through all available means and refraining from unilateral steps that would alter the cross-Strait situation,' Mr Bush said in a statement.

'I believe the election provides a fresh opportunity for both sides to reach out and engage one another in peacefully resolving their differences,' he added.

Mr Bush, who described Taiwan as 'a beacon of democracy to Asia and the world', said that 'peace and stability in the Taiwan Strait' and 'the welfare of the people on Taiwan' are of 'profound importance to the United States'. The US State Department described the election as 'free and fair', and a 'milestone' for Taiwan.

'We look forward to working with Taiwan's new leaders to ensure that the vibrancy in our economic and people-to-people relationship is maintained,' said State Department spokesman Sean McCormack.

Mr Ma, who takes over on May 20, wants closer ties with China and was seen as more Beijing-friendly than his election rival, Mr Frank Hsieh of the ruling Democratic Progressive Party (DPP).

Both candidates however said that reunification was not up for discussion.

Washington would have been happy with either candidate after the headaches Mr Chen caused to the Bush administration.

Mr Chen's controversial policies - especially his decision to hold a referendum alongside the presidential polls on whether the island should seek United Nations membership under the name of Taiwan - angered both Beijing and Washington.

Taiwan split from mainland China in 1949 after the Kuomintang lost a civil war to the communists. China views the island as rebel territory and has threatened to retake it by force if Taiwan were to formally declare independence.

Any Chinese invasion of Taiwan would raise the prospect of a Sino-American war, potentially even a nuclear war, because US law compels Washington to come to the aid of Taiwan if its security is threatened.

Taiwan, under its official name the Republic of China, lost its UN seat to the mainland in 1971 and is now only recognised diplomatically by around 20 countries.

Beijing considers attempts to rejoin the UN using its official title as pushing for independence.

Mr Richard Bush, former de facto US ambassador to Taipei, said before the election that the winner would help end the recent 'strategic divergence' between Taiwan and the United States.

'We could have more confidence about the basic intentions of the new Taiwan government - whoever led it - that it was going to be more consistent with ours,' said the former diplomat, an Asia expert at the Brookings Institution.

The US military was also looking forward to the election, with the top commander of US troops in Asia, Admiral Timothy Keating, saying recently he was 'cautiously optimistic that a little bit of steam will leave the kettle' after the polls.

Mr Randy Schriver, a former senior State Department official, said the election would provide an opportunity for the United States to pursue a 'more balanced policy' with Taiwan, a key ally in Asia.

'I think we have been overly solicitous of China's concerns and too much of their bidding here,' said Mr Schriver.

As a result 'we have contributed to this souring of Taiwan-US relations on a level just about equal to what problems emanated from Taiwan', he said, speaking before the election.

'Overall we lost a perspective that this is a young democracy.'

Election result offers 'real opportunity'
In London, British Foreign Secretary David Miliband hailed the victory of Mr Ma Ying-jeou in Taiwan's presidential election on Saturday, saying it offered a 'real opportunity' to improve links with China.

He also called on the two countries to hold direct talks in a bid to reach a peaceful settlement on the status of Taiwan.

'The successful presidential elections in Taiwan today are testament to Taiwan's vibrant democracy,' Mr Miliband said in a statement released by the Foreign Office.

'The forthcoming change of administration is a real opportunity to renew efforts to improve cross-strait relations.

'I hope that the Chinese government and the new administration will now engage in direct dialogue to resolve differences and find a peaceful solution to the Taiwan question, acceptable to the populations on both sides of the straits.'

Mr Ma, of the opposition Kuomintang (KMT), has promised to work for closer ties with Beijing, which claims Taiwan for itself.

The two have had virtually no direct links since Taiwan split from China in 1949 following a civil war. They are separated by the Taiwan Strait.

Japan calls for dialogue
Japan has renewed its call for dialogue between China and Taiwan after Mr Ma Ying-jeou's victory in Taiwan's presidential election.

In a statement released late on Saturday, Foreign Minister Masahiko Komura avoided evaluating the result, simply recognising his victory in the vote dominated by concern over the economy and hopes for better ties with China.

'Japan hopes that the issue surrounding Taiwan will be resolved peacefully by direct dialogue between the parties concerned on the Taiwan Straits and that dialogue will resume soon for that purpose,' Mr Komura said.

The foreign minister insisted that Japan's diplomatic relations with China remain unchanged, saying: 'It intends to maintain Japan-Taiwan relations as a working relationship on a non-governmental basis.'

Mr Ma, the candidate of the opposition Kuomintang (KMT), has on Saturday promised to work for closer ties with Beijing, which claims Taiwan for itself.

China and Taiwan split after a civil war in 1949 but China still regards the island as a part of its territory and in 2005 passed an anti-secession law that provided the legal framework for retaking Taiwan by force.

Tokyo switched diplomatic recognition from Taipei to Beijing in 1972 and has since barred official contacts with Taiwan. -- AFP