The AIT said the office compound, located in Neihu, symbolizes something greater than the physical component.

"It's not just a building, but rather a focal point of everything that is beneficial to the societies of Taiwan and the United States about our ties," AIT Director Stephen Young said.

National Security Council Secretary General Su Chi said the complex represents a beginning towards a new long-term relationship between the island and the United States.

It is a declaration that bilateral relations remain steady on the solid foundation of "mutual trust", Su continued.

"I am proud to say that on this site, we will be building a 21st century complex that embodies America's 21st century relationship with Taiwan," said Young, who is due to depart this summer.

Legislative Speaker Wang Jin-pyng said the United States is the first country building a de facto embassy compound in Taiwan in the absence of formal diplomatic relations.

"We hope that U.S.-Taiwan relations will continue to develop on the existing foundations into an even more solid one and that more high-level U.S. officials, including members of Congress, will be able to visit Taiwan in the future," Wang added.

AIT officials said the six-hectare compound, which has been leased to the AIT for 99 years, will include an office building of approximately 14,000 square meters, a parking lot and ancillary structures.

All of the AIT's Taipei offices, including the American Cultural Center, the Commercial Section, the Chinese Language and Area Studies School and the Agricultural Trade Office will be located at a single site, they added. The office compound will also include quarters for security personnel, according to officials.

The design of the office compound has prompted speculation that for the first time in more than 30 years, the United States would send marines to Taiwan to guard the facilities, although the AIT declined to comment on the speculation.

Officials from the AIT said they expect the construction work to be completed by 2012, adding that the current estimated cost is around US$170 million.

The proposal to build a new AIT compound was initiated more than a decade ago, but it has taken time to finally execute the project, they added.

The AIT has been representing U.S. interests in Taiwan since Washington switched its official diplomatic recognition from Taipei to Beijing in 1979.

The island has been a frequent source of tensions between China and the United States since relations between the two were established.

Only until recently after President Ma Ying-jeou came into power last year, did cross-strait relations turn friendlier.