Louise Williams, Jakarta – Indonesian police shot and wounded at least two people during riots in Medan yesterday, as the North Sumatran capital was hit by a third consecutive day of mob violence sparked by steep increases in fuel and transport prices.

Unrest is growing across the country as the Soeharto Government ends subsidies on basic goods in line with the conditions imposed by the International Monetary Fund in return for its economic rescue package.

As the protests intensified, the Indonesian House of Representatives announced it would initiate a review of key political, legal and economic legislation, in a sign the Government may be willing to give some ground in the crisis.

However, some analysts said the offer was too little too late, and that the demands of the protesting students and workers had gone beyond compromise and now included the resignation of President Soeharto.

Reporters at the scene of yesterday's shootings in Medan said they saw at least two peoplewounded when Indonesian security officers opened fire to disperse a crowd of protesters estimated at up to 5,000.

Two other people were shot and wounded by police in Medan during rioting on Tuesday, witnesses said.

As well, the Jakarta Post reported yesterday that a student demonstrator had been shot and wounded by police in South Sulawesi's capital of Ujung Pandang.

The price rises follow lay-offs of millions of workers, caused by the collapse of the economy and the devaluation of the rupiah.

The latest violence in Medan came as armed police chased looters from the smouldering remains of rows of shops and houses following a night of clashes between protesters and security forces.

Reports from Medan said scores of people were injured overnight as mobs angered by the price rises joined student protesters and rampaged through the city.

Indonesian newspapers reported that the mobs attacked the homes, shops and warehouses of ethnic Chinese, whose control of business and visible wealth makes them frequent targets. At least 100 homes and 100 shops were destroyed, as well as scores of cars and motorcycles.

Another report said at least one person died and several were injured when they were trapped in a burning building. In the central Javanese university town of Yogyakarta, thousands of residents joined student demonstrators occupying a five kilometre stretch of the main road. One witness, contacted by telephone, said the protest continued until early yesterday morning when police using tear gas and batons forced the crowds off the street.

"It was frightening. The police were quite rough. Only about 40 per cent of the demonstrators were students, the rest were members of the public. The crowd was just running amok, lighting fires and looting."

In Jakarta, students joined minibus drivers in a demonstration in front of the Parliament, one of the first joint actions between students and workers.

The House of Representatives Speaker, Mr Harmoko, announced that laws criticised as having a bias in favour of the the ruling Golkar Party at the expense of the two other legal parties would be revised, modified or scrapped and replaced.

Indonesia's much-criticised subversion law, under which opponents of Mr Soeharto's New Order regime have been jailed, would also be discarded, as forecast by the Justice Minister, Mr Muladi, last month.

Mr Harmoko also announced that the three parties and the armed forces faction of the Parliament had agreed to reform laws on monopolies and consumer rights, banking legislation and anti-corruption laws. And the National Police spokesman, Brigadier General Da'I Bachtier, confirmed that members of the public were joining student demonstrations, saying that of about 160 people arresteded since Monday, 40 were not students.

"People are coming from all over the place, and when there is a mass of people gathered, anything can happen," he said.

A local political scientist, Mr Ryass Rasyid, said the demands of the students and their supporters had gone beyond the review offered by the House of Representatives and now involved the resignation of the President and the convening of an emergency session of the 1,000 member People's Consultative Assembly.

He said the student demonstrations could be stopped only by military force or through extensive political reforms.

"I have heard of student efforts to solicit support from workers," he said. "It is therefore very urgent for the Government to take action to accommodate the people's aspirations."