Taiwan Tuesday confirmed it plans to study the feasibility of building a submarine fleet on its own in a move which suggests it is running out of patience over a long-stalled US offer to supply eight of the warships.

The navy hopes to come up with an in-depth report in four years on items ranging from design and acquisition of equipment, to construction capabilities and product tests and evaluation, according to a defence ministry statement.

The report will cost around Tw$140 million ($4.7 million) to be financed by a defence ministry-controlled fund, it said.

"The move is a crucial sign showing that the navy has dropped the idea of purchasing submarines from the United States and decided to build them at home," a naval source was quoted by the Liberty Times as saying.

The paper said an initial naval evaluation report indicated that the island's leading shipyard CSBC Corporation had acquired expertise to build the sophisticated warships.

But Taiwan is still short of critical know-how on development of submarine fighting systems, sonars and torpedo launch tubes, it said.

In April 2001, then US president George W. Bush approved the sale of eight conventional submarines as part of Washington's most comprehensive arms package to the island since 1992.

Since then, however, there has been little progress as the United States has not built conventional submarines for more than 40 years and Germany and Spain have reportedly declined to offer their designs for fear of offending China.

The Taiwanese navy currently operates a fleet of four submarines, but only two of them, Dutch-built, could be deployed in the event of war. The other two were built by the United States in the 1940s.

Tensions between Taiwan and China have eased markedly since President Ma Ying-jeou came to power on a platform of beefing up trade links and allowing more Chinese tourists to visit. Ma was re-elected in January 2012.

But Taiwan, which has governed itself since 1949, still sees a need to modernise its armed forces because China regards the island as part of its territory awaiting reunification, by force if necessary.