* Taiwan president had asked for $40 bln in extra

spending

* Taiwan parliament approved 2/3 of what government

wanted

* China has stepped up military pressure against Taiwan

* US is Taiwan's most important international backer

TAIPEI, May 9 (Reuters) - Further delays to Taiwan

military spending are a "concession" to China, the U.S. State

Department said, as Taipei's defence ministry detailed the

impact of projects excluded from a package passed by the

opposition-controlled parliament.

Taiwan President Lai Ching-te had sought $40 billion in

supplementary defence spending to better deter China, which

views the democratically governed island as its own territory

and has stepped up its military pressure.

But after repeated delays by opposition parties, who hold

the majority of seats, parliament on Friday approved only

two-thirds of the money requested, all for U.S. weapons rather

than including other projects like domestically developed drones

and missiles.

The opposition said that while it supports defence spending,

it would not sign "blank cheques", saying the proposals were

vague in places and could open the door to corruption.

A State Department spokesperson said the U.S. supports

Taiwan's acquisition of critical defence capabilities

"commensurate with the threat it faces" and consistent with the

ongoing commitment of multiple U.S. administrations.

"While we are encouraged by the passage of this special

defence budget after unhelpful stalling, the United States notes

that further delays in funding the remaining proposed

capabilities are a concession to the Chinese Communist Party,"

the spokesperson added.

The U.S. is Taiwan's most important international backer and

arms supplier, despite the lack of formal diplomatic ties, and

has strongly supported increased military spending. Beijing has

repeatedly demanded an end to weapons sales.

In a statement late on Friday, Taiwan's defence ministry

said the approved spending completely excludes certain

commercial purchases, which is highly likely to create

"capability gaps".

"Our country faces a severe and continuously escalating

threat environment," it said.

One plan not included is the Chiang Kung, or "Strong Bow",

anti-ballistic missile which is meant to form the backbone of

Taiwan's new "T-Dome" air defence system, the ministry added.

"Following its removal from the special budget, if it cannot

be procured in a timely manner, air defence combat effectiveness

will be severely impacted," it said.

Lack of approval for drone systems like sea attack drones

will significantly delay asymmetric warfare capabilities and

affect projected economic growth and employment opportunities

for domestic industry, the ministry said.

Lai said that while he appreciated the approved funding,

which allows purchases of such items as the Lockheed Martin ( LMT )-made

HIMARS multiple-launch rocket system to proceed, this

was only the first step.

"Any gap will affect the integrity of the overall defence

system. Any delay will increase the shared security risks borne

by the people of Taiwan," he posted on Facebook.