Taiwanese students studying at Chinese mainland universities will pay the same tuition fees as their mainland peers starting this coming term.

They also will become the beneficiaries of a newly launched scholarship fund, which will distribute funds of 7 million yuan (US$864,000) each year.

The move was announced at a press conference in Beijing yesterday by Dai Xiaofeng, director of the Department for Exchange of the Office for Taiwan Affairs of the State Council.

When the new university term begins next month, Taiwanese students will be charged the same tuition and boarding fees as their mainland classmates, living in the same dorms and studying at the same colleges, Dai said.

Wu Guosheng, an official with the Ministry of Finance, said a scholarship would be awarded to 20 per cent of Taiwanese students studying on the mainland each year.

The ministry will also offer special subsidies of about 8,000 yuan (US$918) per student per year to institutions that enrol Taiwanese students, based on the extra educational costs they incur, Wu said.

Ding Yuqiu, deputy director of the Office for Hong Kong, Macao and Taiwan under the Ministry of Education, said Taiwanese students who apply for the scholarship fall into two categories: those enrolled from the joint examination and those enrolled by 10 universities in Fujian and Guangdong provinces that have a separate right to recruit students from Taiwan.

The new policy has been widely applauded by undergraduates.

The average annual tuition for Taiwanese undergraduates studying on the mainland used to be about US$1,000 to 1,500, their mainland classmates had to pay the equivalent of US$367.

Ding said similar policies for students from Hong Kong and Macao are being considered.

Last year, she said, 1,777 Taiwanese students chose to further their studies on the mainland, a record high since mainland colleges began enrolling Taiwanese students in 1985.

The policy was seen as an implementation of the consensus reached in May by Hu Jintao, general secretary of the Communist Party of China's Central Committee, and both former Kuomintang Party Chairman Lien Chan and People First Party Chairman James Soong.

They then agreed to encourage Taiwanese students to study in mainland colleges by equalizing tuition fees.

Taiwanese university students and teachers attending a seminar in Xiamen warmly welcomed Beijing's decision. Chou Szu-tao, a student at Taiwan University, said the move will encourage more Taiwanese students to study on the mainland and help them know more about the mainland.

"It's really good news because lots of students have long been anticipating it," she said.

Charles Chiu, an assistant professor with Shih Hsin University, hailed the policy as a positive step towards improving cross-Straits relations.

"It demonstrates the mainland's sincerity in safeguarding the interests of the Taiwanese people," he said.

"It will benefit cross-Straits exchanges as a whole."