The move to disband the National Unification Council ahead of a visit by former U.S. Deputy Secretary of State Richard Armitage next week defies strong warnings by the United States and China.
Chen surprised both countries last month by announcing it was time to consider abolishing the unification council. The body was set up by the opposition Kuomintang when the party was in power, to ease relations across the Taiwan Straights, but has remained inactive since Chen became president in 2000.
Chen said maintaining the body deprived Taiwanese of their choice to decide the island's future, the South China Morning Post reported.
The United States considers the plan a breach of trust by Chen, who has pledged not to declare independence for Taiwan, not to change the island's name or constitution and not to scrap the unification council.
China's Taiwan Affairs Office described Chen's move as "dangerous," warning that it would trigger a crisis across the Taiwan Straits and destroy peace and stability in the Asia-Pacific region.