By Rosemarie Francisco and Manuel Mogato

MANILA (Reuters) - China plans to occupy a disputed chain of reefs and rocks in the South China Sea to expand its territory before regional rules on maritime behavior come into effect, the Philippines' top diplomat said on Wednesday.

The Philippines believes China's incursion into the Scarborough Shoal is a threat to peace in Southeast Asia, said Foreign Affairs Secretary Albert del Rosario.

In Beijing, a foreign ministry spokesman described the shoal - which lies about 125 nautical miles off the Philippines' main island of Luzon - as China's "inherent territory".

In an interview with Reuters in his Manila office, del Rosario said the Philippines would file a diplomatic protest against China after it discovered concrete blocks on the shoal, which Chinese ships have occupied since April last year.

He urged regional governments to speed up talks on a binding code of conduct (CoC) governing behavior at sea.

"We think that China is trying to stay ahead of the CoC," he said. "We think that they have an assertion agenda that they are trying to complete before they are able to sit down and negotiate a CoC."

Tension over the South China Sea, one of the world's most strategically important waterways, has risen as China uses its growing naval might to assert extensive claims over the oil- and gas-rich waters more forcefully, fuelling fears of a military clash.

Four of the 10 members of the Association of Southeast Asian Nations (ASEAN), including Vietnam and the Philippines, have overlapping claims with China. Taiwan also has claims over the entire sea.

"This kind of activity places the region in jeopardy in terms of peace and stability," del Rosario said.

"If the Philippines is the target of China today, another country could be the target tomorrow. So this should be considered as a regional issue."

Chinese Foreign Ministry spokesman Hong Lei, asked about the Philippine's latest accusations, said they were not true, though he did not provide details.

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"What the Philippines said of the situation is not true. The Scarborough Shoal is China's inherent territory," he told reporters in Beijing.

"Based on the present circumstances the Chinese government's official ships have been conducting normal patrols in the waters around the Scarborough Shoal in order to safeguard its sovereignty ... This is China's legitimate right and cannot be questioned."

"LARGER CHALLENGE"

China and the Philippines accuse each other of violating a 2002 declaration of conduct, a non-binding confidence-building agreement on maritime behavior signed by China and ASEAN.

Del Rosario said the latest Chinese activity in Scarborough Shoal was discussed at a cabinet meeting on Wednesday, where fresh surveillances pictures were shown.

"If we looked back to what they did in Mischief Reef, this could very well be a repetition of what happened there," he said, adding the latest incursion was "a significant and larger challenge" for the country.

In February 1995, the Philippines discovered a cluster of huts in half-submerged Mischief Reef in the Spratly Islands, 130 miles off its coast. Several years later, the shelters which China had said were meant as shelter for fishermen, had been turned into a multi-level concrete fortress.

Philippine officials said the concrete pillars and blocks in Scarborough Shoal appeared to have been dropped from an aircraft, describing them as possible material for permanent structures.

It could be the first case of occupation of an uninhabited feature in the South China Sea since the 2002 code was signed.

(Additional reporting by Ben Blanchard and Sui-Lee Wee in BEIJING; Editing by Robert Birsel, John Stonestreet)