China and Taiwan announced on Thursday they would quickly resume talks that have been suspended for more than a decade, in the latest sign of a dramatic thaw in tensions between the rivals.

The agreement to gather in Beijing in two weeks came a day after Chinese President Hu Jintao met the head of the island's ruling Kuomintang party, Wu Poh-hsiung, the highest-level contact since China and Taiwan split in 1949.

Their historic meeting and the agreement to resume talks are part of a rapprochement that began when the Kuomintang defeated the pro-independence Democratic Progressive Party in Taiwan's presidential polls in March.

China on Thursday sent an official letter of invitation to sit down for the talks from June 11 to 14, with the focus to be on establishing direct flights between the two sides and allowing mainland tourists to travel to Taiwan.

"We hope the talks will make progress on the two issues to meet the expectations of people from both sides of the strait," said the invitation letter from China's Association for Relations Across the Taiwan Strait.

Taiwan was quick to accept the offer, a formality after Hu and Wu made a verbal agreement on the talks during their meeting in Beijing.

Chiang Pin-kun, chairman of Taiwan's Strait Exchange Foundation, said the invitation came "at a right time" and he would lead a delegation comprising businessmen and officials for the negotiations.

China said the talks would be the start of regular consultations based on the so-called "1992 consensus", according to its official Xinhua news agency.

That was a guideline for talks the mainland and Taiwan reached in 1992, in which each side could interpret the term 'One China' in its own way.

Based on that agreement, China and Taiwan held a landmark dialogue in 1993 in Singapore but they were never held in that form again, with the Chinese side suspending the process in 1995 amid acrimony between Beijing and Taipei.

The two sides split at the end of a civil war in 1949 and China still claims Taiwan as part of its territory awaiting reunification. It has in the past threatened to invade if Taiwan declares independence.

Those threats were ramped up during the reign of Chen Shui-bian, Taiwan's previous president whose pro-independence rhetoric angered the mainland.

His successor, Ma Ying-jeou, who was sworn in as president last week, has taken a much more conciliatory approach with China than Chen.

Ma has called for the resumption of the dialogue, pledged to deepen economic links between the two sides and vowed not to enter an arms race with China.

During Wednesday's meeting with Wu, Hu called for "peaceful development" in cross-strait relations and vowed "positive measures" to resolve any doubts or misunderstandings on the part of Taiwan.

He also held out the prospect of Taiwan finally being allowed to join some international organisations, and singled out the World Health Organisation.

China has previously blocked Taiwan's attempts to join such organisations as a separate member because it insists the island falls under its domain.

Chinese analysts said tensions had clearly eased since Ma's election, but cautioned that many pitfalls remained on the road to reconciliation, and that China's military build-up near the island would not be scaled down.

"The mainland is confident in Ma's attitude towards (not seeking) Taiwan independence. But there are still difficulties that need to be overcome," said Zhang Wensheng, Institute of Taiwan Studies director at Xiamen University.

"As to the military build-up, it will continue because the military build-up is... aimed at (preventing) Taiwan independence."

Wu's meeting with Hu came in the middle of a six-day visit to China. The Kuomintang chairman on Thursday travelled from Beijing to Shanghai.

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Wu Poh-hsiung is on a historic visit to China

AFP