China still sees Taiwan as part of its territory to be brought back into its fold, by force if necessary, even though the island has been self-governing since the two sides split after a civil war in 1949.
Ties have worsened since Beijing-sceptic President Tsai Ing-wen took power last year, ending an eight-year rapprochement.
Delivering the four-yearly report to parliament, defence minister Feng Shih-kuan replied "yes" when asked by a lawmaker whether Taiwan was capable of firing at mainland China.
"It is the first time the ministry has confirmed this," lawmaker Wang Ting-yu told AFP, saying Taiwanese missiles may be able to travel more than 1,500 kilometres.
The ministry has said in the past that it has produced cruise missiles, but has never publicly stated their capabilities.
The report also pledged to create an enhanced military front that would protect Taiwan.
"Should the enemy insist on invading, we will weaken their capabilities by striking enemy troops at their home bases, fighting them at sea, crushing them as they approach the coastlines and wiping them out on the beaches," it said.
China has more than 1,500 missiles aimed at Taiwan, according to the defence ministry.
The island's military, which consists of around 200,000 troops, is a fraction of China's 2.3 million-strong army.
Defence minister Feng said he hoped to raise spending to three percent of GDP in 2018, up from two percent this year and the highest proportion of Taiwan's budget dedicated to the military for 10 years.
Since Tsai came to power, Beijing has severed all official communications with Taipei and upped its military drills near the island following a protocol-smashing telephone call between Tsai and Donald Trump.
The United States is Taiwan's most powerful ally and its main arms supplier, even though the two sides do not have official diplomatic ties after Washington switched recognition to Beijing in 1979.
Today's report came as Taiwan was also hit by the latest in a string of espionage cases involving China.
Local media said a former bodyguard of former vice president Annette Lu had been arrested for allegedly spying for China and trying to recruit military officials to join him.
National Security Bureau director-general Peng Sheng-chu said in parliament earlier this month that Chinese espionage is "more serious than before" as some reports claimed that up to 5,000 people may be spying for China on the island.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)