By John Ruwitch

SYDNEY, Sept 6 (Reuters) - The next two years will be a period of "high danger" in the Taiwan Strait, China's President Hu Jintao told U.S. President George W. Bush on Thursday, citing Taiwan's provocative independence posturing.

Taiwan's ruling Democratic Progressive Party plans to hold a referendum alongside presidential elections next March on whether the island should seek membership of the United Nations, ignoring warnings from ally Washington and rival Beijing.

The United Nations swapped relations with Taipei for Beijing in 1971 under a "one China" policy. Beijing sees Taiwan as a part of China and has said it would use force if necessary to prevent from formal independence.

"This year and next year are a period of high danger for the Taiwan situation," Hu told Bush on the sidelines of an Asia Pacific summit, according to a Chinese Foreign Ministry spokesman.

"We must give stronger warnings to the Taiwan authorities," Liu Jianchao quoted Hu as saying.

Hu and Bush met on the sidelines of an Asia Pacific Economic Cooperation (APEC) meeting in Sydney.

While Washington is arguably democratic Taiwan's biggest ally and is committed to assisting in its defence, it has become increasingly engaged with Beijing on economic an security issues and says the island is dangerously provoking China by pressing for membership.

U.S. Deputy Secretary of State John Negroponte has said the referendum would be a step towards independence and called on Taiwan President Chen Shui-bian, a key supporter of the referendum and of greater independence, to honour the status quo between Taiwan and China.

Bush reassured Hu that his position remained the same, a White House official said.

"We are concerned very much about this step that Taiwan has undertaken. We also don't want to see this blown up too big. We don't want to see anyone provoked by the actions of the Taiwanese," said deputy national security adviser Jim Jeffrey.

"So, for the moment we're going to stay with our position and continue to exert our good influence on the Taiwanese to see if we can change their position."

Beijing, however, is unlikely to take any chances, and the Chinese Foreign Ministry's Liu said it would make the necessary preparations to prevent Taiwan from becoming independent.

"In reality, all along we have made the greatest efforts for the prospect of peaceful reunification. At the same time, we cannot allow anyone to use any means to split Taiwan from the motherland," Liu said when asked if China was preparing militarily or otherwise to prevent Taiwan independence.

"China will make the necessary preparations for this."

Taiwan, a democracy which has been self-ruled for nearly 60 years, is diplomatically recognised by just 24 mostly impoverished countries around the world, attracted by its aid money.

The United States dropped formal recognition of Taipei in 1979 when it established diplomatic ties with Beijing. (Additional reporting by Matt Spetalnick)

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