Analysts, however, discounted a military confrontation over the potentially oil-rich South China Sea chain because Manila is aware of its military weakness and Peking has much to lose in its diplomatic relations with its South-east Asian neighbours.
The Spratlys are also claimed in whole or in part by Brunei, Malaysia, Taiwan and Vietnam.
"I have ordered the department of defence to strengthen, within our limited capabilities, our detachments and our naval presence in the [area] and to intensify its aerial surveillance," President Ramos said as he opened a meeting of his National Security Council.
Manila has accused China of building structures and deploying warships on Mischief Reef, 135 nautical miles off the south-west Philippines island of Palawan and is within the country's 200-mile economic zone. It is part of the island chain that the Philippines has declared as part of its territory.
Mr Ramos pledged that Manila - the weakest militarily among the six claimants - will "exhaust every diplomatic option available", including the UN Security Council. He added: "At the same time, we all realise that, while hoping for the best, we must prepare for the worst."
Congressman Bonifacio Gillego, a former army intelligence officer, said Mr Ramos's order appeared to veer from the Philippines' earlier position of pure diplomacy and warned that beefing up troops in the area was "provocative".
Mr Ramos, in a new approach, proposed that every disputed island be placed "under the stewardship of the country closest to it", provided that the steward allowed anchorage and other "peaceful pursuits". He also suggested that all claimants stop issuing unilateral grants of drilling concessions in the disputed territories.
China and Vietnam have granted overlapping drilling rights to US firms to explore for oil in one bloc. Chinese warships blocked a Vietnamese oil rig in the area last year.
Mr Ramos said the Chinese incursion on the Philippines-claimed reef was "not just a bilateral problem." He warned that fighting in the area "could easily burst the balloon of political stability that underpins East Asia's growth".