The Taiwan Railways Administration, the central government agency that runs Taiwan's conventional rail network, has clarified which station names are to be spelled according to hanyu pinyin, now Taiwan's official system for rendering Chinese words into the Latin alphabet, and which are to continue to be known by their old spellings.
The rationale, it seems, is that to change the spelling of Taipei, Kaohsiung and other places well known outside Taiwan would confuse non-Taiwanese. Ten cities fall into this category. Here they are, with the spelling in parantheses is hanyu pinyin:
From north to south: Keelung (Jilong); Taipei (Taibei); Hsinchu (Xinzhu); Taichung (Taizhong); Changhua(Zhanghua); Chiayi (Jiayi); Kaohsiung (Gaoxiong); Pingtung (Pingdong). On the east coast: Hualien (Hualian); Taitung (Taidong).
Of course, it's by no means certain that other government agencies, such as the Freeway Bureau, which administers Taiwan's motorways, will do the same. When driving, be prepared to see Taizhong, Pingdong etc.
2011 UPDATE
According to reports in the Chinese-language media, such as this one, the government has decided that hanyu pinyin will not be universally applied to smaller towns. The town previously known as Lukang (鹿港) will retain that old spelling - rather than Lugang - while Danshui (淡水) will officially be Tamsui, a rendering of the place name as its pronounced in Taiwanese.
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