Lawmakers pressured by LGBT groups as well as by church organisations opposed to the move approved most of a government-sponsored bill.
The island's Beijing-friendly KMT party said it could sign a peace deal with China if it wins a presidential election next year.
November's election losses presented a major challenge to President Tsai Ing-wen, who faced mounting criticism at home over her reform agenda while facing renewed threats from China, which considers the self-ruled island its own.
Taiwan's President Tsai Ing-wen has insisted her country won't accept a 'one country, two systems' policy favoured by China.
Chinese President Xi Jinping seeks "reunification" of self-ruled island nation with China, in a speech on anniversary of Taiwan policy change, a day after Taipei asked Beijing to respect its sovereignty.
Taiwan's President Tsai Ing-wen resigned as leader of the ruling Democratic Progressive Party (DPP) after it suffered major defeats in key mid-term polls.
Addressing a parade to mark Taiwan's 107th national day, President Tsai Ing-wen urged China to be a responsible country, rather than a "source of conflict."
The law approved by Congress and signed by US President Donald Trump encourages the US to send senior officials to Taiwan to meet Taiwanese counterparts and vice versa.
President Tsai Ing-wen says during the US trip that Taiwan has raised defence spending considerably this year and will continue to do so.
Taiwan's President Tsai Ing-wen says the difference between Taiwan and China is democracy and freedom. The leader refers to Beijing's crackdown on protesters in 1989 at Tiananmen Square, the 28th anniversary of which is being observed in Hong Kong.
China has called on the United States not to allow Taiwan President Tsai Ing-wen to transit to the country during a trip to Latin America. The American Institute in Taiwan says the transit does not contradict the "one China" policy.
Call between U.S. president-elect and Taiwanese president Tsai Ing-Wen threatens to upset diplomacy over disputed South China Sea
Subscribe to our Youtube channel for all latest in-depth, on the ground reporting from around the world.
Copyright © 2019 TRT World.