For the first time in the Cooperation Afloat Readiness and Training exercises, the two navies will conduct combined missile firing, requiring guns and anti-air missiles to shoot at the same target, officials said.

Another highlight is an amphibious exercise involving US Navy Marines, supported by the USS Rushmore, an amphibious ship, as well as Singaporean helicopters.

"The exercise provides the opportunity for our two countries to gain an understanding of how we each do business... what our goals and priorities are," said Captain Gary Erikson, commander of the CARAT task force.

"(It) creates a spirit of cooperation in case we ever have to work together in a real-world situation," he told reporters after the opening ceremonies.

The exercise, involving 2000 personnel and lasting to July 14, is the seventh in a series that began in 1995.

The US Navy conducts CARAT exercises with six different Southeast Asian nations, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand.

Security in the region is potentially threatened by a series of factors, such as political instability in its largest country Indonesia, where President Abdurrahman Wahid's grip on power is facing increasing challenge and separatist rebellions threaten to tear the nation apart.

Another possible flashpoint is the Spratlys island chain in the South China Sea, claimed by Brunei, Malaysia, the Philippines and Vietnam as well as China and Taiwan.

All the claimants but Brunei have stationed troops on islands that they occupy, with China claiming the entire chain.

Earlier July 2, Singapore Defence Minister Tony Tan said peaceful relations among the United States, China and Japan were the key to stability in Asia.