TAIPEI, March 27 (AFP) - The Dalai Lama held a landmark meeting with President Lee Teng-hui despite fierce Chinese protests on Thursday at the climax of his first visit to Taiwan.

The encounter took place amid tight security and a demonstration from a group campaigning for the island's independence.

The long-awaited meeting took place despite anger from China which has denounced the two leaders as separatists working to divide the "motherland" into their own separate strongholds.

Lee and his wife, Tseng Wen-hui, walked out from the entrance of the Taipei Guest House to meet the Dalai Lama, where they shook hands for a brief photo call in front of selected photographers.

Several hundred riot police were deployed to guard the building in central Taipei close to the presidential office as a small group of radical members of the pro-independence Labour Party demonstrated outside the headquarters of the ruling Kuomintang, 500 metres (yards) away.

Lee and the Dalai Lama walked hand and hand into the reception room of the guest house.

Inside the president gave the exiled Tibetan leader an amber-coloured crystal bust of the Dalai Lama standing in front of his Potala Palace in Tibet's capital, Lhasa. The sculpture weighed about 27 kilogrammes (60 pounds).

Lee was accompanied by his secretary general Huang Kun-hui. The meeting puts a final seal on a 10-year thaw in relations after the Dalai Lama published a five-point plan in 1987 calling for talks with China, saying he was seeking autonomy not independence for Tibet which has been under Chinese rule since 1951.

Late Wednesday the Dalai Lama met with Vice President and Premier Lien Chan in a Taipei hotel after earlier talking with pro-independence politicians from the main Democratic Progressive Party (DPP).

Lien "admitted there had been unnecessary misunderstandings in the past. Now this is a new beginning," government spokesman Su Chi told a press conference afterwards.

The Dalai Lama has admitted that in the past Taiwan had a bad image among his people, but stressed he had detected a new sincere attitude.

He told Lien he "was not against communists and not against the Chinese and hoped all people can develop harmonious relations," Su added.

But Beijing has reacted furiously to the visit accusing the Dalai Lama of trying to "trick" the international community, while charging that Lee was acting to split the motherland.

China has imposed Chinese rule on Tibet since 1951 and views Taiwan as a renegade province after communist forces led by Mao Zedong drove nationalists troops here in 1949 at the end of a bitter civil war.

Both the exiled Tibetan leader and Lee have dimissed the charges that they are separatists.

The Dalai Lama on Monday urged China to hold talks without preconditions on the future of Tibet, stressing what he wanted was genuine autonomy for his people.

Taiwan has repeatedly said that it too wants to see the reunification of China, but not under the current conditions.