Taiwan's Beijing-friendly President Ma Ying-jeou stepped down Wednesday as chairman of the ruling party, following a massive polls defeat for the government as public fears grow over Chinese influence.

Ma resigned as head of the Kuomintang (KMT) following the party's humiliation in local elections Saturday -- seen as a key barometer ahead of the 2016 presidential race.

In a sombre meeting earlier in the day President Ma bowed deeply as a sign of apology as he formally presented his resignation to senior party officials, which was televised live.

"The KMT suffered an unprecedented defeat. I apologise to the supporters as the chairman... I feel shamed," he said.

"I must shoulder the utmost responsibility for the defeat and today I announce my resignation to the Central Standing Committee."

Ma will retain the presidency until 2016 when he must step down after serving two terms, but observers say his influence within the party will now be severely diminished.

His resignation as chairman, however, allows the KMT to begin the difficult task of reshaping itself, which began with the announcement of a new premier Wednesday.

Previous vice-premier Mao Chi-kuo will replace Jiang Yi-huah who resigned on Saturday night, hours after the party's election humiliation.

"We will remember that the country belongs to all people and the future belongs to the new generations," Mao said Wednesday.

Tense relations with China have warmed since Ma was elected in 2008 on a platform of improving cross-Strait ties and reviving the slowing economy.

But public sentiment has turned against the Beijing-friendly approach as voters say trade deals have been agreed in secret and not benefited ordinary Taiwanese people.

Taiwan and China split in 1949 at the end of a civil war, but Beijing still claims the island as part of its territory awaiting reunification -- by force if necessary.

The continued stagnation of the island's economy and a string of food scandals have added to the KMT's woes.

- Uphill struggle -

Ma, who had announced his imminent resignation Tuesday, urged the party to remember the "painful lesson" of the polls result.

The KMT lost five of Taiwan's six large municipalities -- the most hotly contested seats -- in the local elections. New Taipei was the only municipality retained by the KMT.

The city's mayor Eric Chu -- who only won his reelection by a narrow margin -- is one of those tipped to take over the party leadership.

Chu stressed that Taiwan and China should "pursue their similarities and respect their differences" during a meeting with a top Chinese official in June.

But whoever takes over as chairman will struggle to revive the party's fortunes in time for the presidential race, analysts say.

"I don't think the KMT can push any further with China ties as Ma's China and economy cards did not work in the elections," said Shih Cheng-feng, a political analyst at National Dong Hwa University.

"I think it would be very difficult for the party to swing back from the defeats before 2016."

The new chairman will be elected by party members late January, with Vice President Wu Den-yih to serve as acting chairman.

The China-sceptic Democratic Progressive Party (DPP) took 47.5 percent of the votes cast across the island Saturday, with the KMT on 40.7 percent.

DPP chairman Tsai Ing-wen on Wednesday thanked voters for their support and pledged the party would not "relax" after its election victory.