The challenge comes from the Democratic Progressive Party, which advocates independence for Taiwan.

The BBC's Gill McGivering: "Elections are being hailed as a political landmark"

This is staunchly opposed by China, which regards Taiwan as a renegade province. Initial results are expected in the next few hours.

If the KMT were to lose its majority in the Legislative Yuan it would signal a major turning point in Taiwanese politics.

President Lee Teng-hui getting into the campaign spirit

Voting was steady in Taiwan's capital, Taipei, with officers at some polling stations hinting at a good voter turnout.

Many voters told the BBC they thought these elections were more free and fair than in previous years, with far less campaign violence. But some complained the practice of vote buying was still common, particularly in the more rural south of the island.

Correspondents say campaigning has been fierce and bitter, especially in Taipei, where the race for the powerful post of mayor of the capital has dominated the news.

The ruling party is determined to win back the office which it lost four years ago for the first time in its history.

Its candidate is one of Taiwan's most popular politicians, a youthful former justice minister known for fighting corruption. But his rival, the present mayor, will be hard to beat.

He is a powerful figure in Taiwan's main opposition party and tipped as a possible contender in the race for president in the year 2000.

Fierce campaigning

As polling day approached campaigning became increasingly fierce with political passions occasionally overflowing into full-blown violence.

Many candidates used bitter personal attacks and sex scandals to damage rivals, whilst allegations of vote buying also raised concerns.

A Taipei childs shows support for incumbent DPP mayor Chen Shui-bian

Twelve years after martial law was lifted, democracy is still young in Taiwan and government officials say converting the public to a clean democratic culture is proving a long, slow process.