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All parties campaigned up to the last minute

The independence-leaning president said he was "shamed", resigning as chairman of the Democratic Progressive Party.

The elections are seen as a barometer for the presidential poll on 22 March.

China regards Taiwan as a renegade province that should be reunified.

Referendums

With all the votes counted, the KMT secured 81 seats, Taiwan's election commission announced.

TAIWAN'S POLL RESULTS KMT - 81 seat DPP - 27 seats other parties - 5 seats

The DPP got 27 seats (24%), while smaller parties won five seats.

Under a new electoral system, the number of seats in Taiwan's new parliament has been cut from 225 to 113.

The change was adopted in 2005 to reduce corruption and improve efficiency but observers say the new system may marginalise smaller parties in favour of the DPP and the KMT.

KMT presidential hopeful Ma Ying-jeou has called for change

A new voting system was also introduced whereby voters cast ballots for both a party and a particular candidate in their constituency.

Seventy-three seats were contested by a total of 296 individual candidates representing 12 parties, while 34 seats were to be allocated on a party list system. A further six seats were reserved for ethnic minorities.

Two referendums were held alongside the legislative election.

The first asked voters to support legislation to force the KMT to return state assets the DPP says were illegally amassed during the 1950s, while the other, tabled by the KMT, called for action against corrupt officials.

Beijing quiet

BBC China analyst Shirong Chen says the two main parties concentrated on local issues and shied away from discussing China in the run-up to the vote, a tactic the Chinese government has also adopted.

Beijing has learned from its past misadventures during Taiwanese polls that verbal warnings and missile tests would backfire in favour of candidates from the pro-independence DPP, our correspondent says.

China has been focusing on getting countries like the US and France to oppose Taiwan's referendum on joining the UN, which will be held alongside the presidential election in March.

China has also been persuading Taiwan's diplomatic allies to switch recognition from Taipei to Beijing, prompting the Taiwanese foreign minister to make a futile trip to Malawi to consolidate bilateral ties.