TAIPEI (AFP) - Taiwan's Beijing-friendly President Ma Ying-jeou stepped down on Wednesday as chairman of the ruling party, following a massive polls defeat for the government as public fears grow over Chinese influence.

Mr Ma resigned as head of the Kuomintang (KMT) following the party's humiliation in local elections on Saturday - seen as a key barometer ahead of the 2016 presidential race. He bowed deeply as a sign of apology in a sombre meeting with senior party officials, televised live.

"The KMT suffered an unprecedented defeat. I apologise to the supporters as the chairman... I let everybody down," he said. "I must shoulder the utmost responsibility for the defeat and today I announce my resignation to the Central Standing Committee."

Mr Ma will retain the presidency until 2016 when he must step down after serving two terms, but observers say his influence within the party will now be severely diminished. His resignation as chairman, however, allows the KMT to begin the difficult task of reinventing itself.

The new chairman will be elected by party members in an election set for late January, with Vice-President Wu Den-yih to serve as acting chairman.

Tense relations with China have warmed since Ma was elected in 2008 on a platform of improving cross-Strait ties and reviving the slowing economy.

But public sentiment has turned against the Beijing-friendly approach as voters say trade deals have been agreed in secret and not benefited ordinary Taiwanese people.

Taiwan and China split in 1949 at the end of a civil war, but Beijing still claims the island as part of its territory awaiting reunification - by force if necessary.

The continued stagnation of the island's economy and a string of food scandals have added to the KMT's woes.

Mr Ma, who had announced his imminent resignation on Tuesday, urged the party to remember the "painful lesson" of the polls result.

"Let us... work hard so the KMT can win back the people's heart," he said.

The KMT lost five of Taiwan's six large municipalities - the most hotly contested seats - in the local elections. New Taipei was the only municipality retained by the KMT.

The city's mayor Eric Chu - who only won his reelection by a narrow margin - is one of those tipped to take over the party leadership.

Mr Chu stressed that Taiwan and China should "pursue their similarities and respect their differences" during a meeting with a top Chinese official in June.

But whoever takes over as chairman will struggle to revive the party's fortunes in time for the presidential race, analysts say.

"I don't think the KMT can push any further with China ties as Ma's China and economy cards did not work in the elections," said Mr Shih Cheng-feng, a political analyst at National Dong Hwa University.

"I think it would be very difficult for the party to swing back from the defeats before 2016," he added. "Whoever takes over as KMT chairman is in an uphill battle to lead it through the crisis."

The China-sceptic Democratic Progressive Party (DPP) took 47.5 per cent of the votes cast across the island on Saturday, with the KMT on 40.7 per cent.