In 2001 the United States offered to sell a previous weapons package including eight diesel-powered submarines, 12 P-3C submarine-hunting aircraft and PAC-3 Patriot missiles.
Opposition lawmakers however have blocked a special budget to buy the arms in parliament, claiming the package is unnecessary and expensive.
As a result of those delays, President George W. Bush declined to approve the F-16 sale.
"The special arms package still has not been passed. Once it is passed, this case (for the F-16s) will be approved," said a Taiwan defense department official, citing comments by National Defense Minister Lee Jye made a day earlier during parliamentary questions.
U.S. arms sales to Taiwan are a politically sensitive issue, as they are opposed by Beijing, and viewed in Washington as a test of Taiwan's willingness to invest in its own defense and cut the chance of a cross-straits clash that could end up drawing in the United States.
The National Defense Ministry says the planes are needed to defend Taiwan from any assault by China, which views the separately ruled island as part of its territory.
The older F-16 and Mirage-2000 fighters will remain in service for another 15 to 20 years but because of the gradual decommissioning of the aging F-5s and IDFs over the coming years, the air force is expected to be short by more than 40 fighters in 2015. Hence they need to build a new fighter fleet to fill the vacuum, according to Minister of National Defense Lee Jye.
Taipei's first choice would be to purchase the F-35 Lightning II - which will come into service in the next few years - but the US has refused to offer Taiwan its newest fighters.
The F-16C/D deal is part of the 1979 Taiwanese Relations Act but is still a shift in US policy. Back in 1992, the US agreed to sell Taiwan 150 less sophisticated F-16A/Bs, but refused to provide F-16C/Ds which have a longer range and powerful ground attack capability.
The PRC does not recognize the legitimacy of the Taiwan Relations Act as it is viewed by them as "an unwarranted intrusion by the United States into the internal affairs of China."
F16 net.
