Richard Lloyd Parry, Jakarta – The Indonesian government is covertly sending thousands of combat troops into the occupied territory of East Timor in what looks alarmingly like a preparation for a military offensive, according to Western diplomats in Jakarta.

Western observers in East Timor believe that they have confirmed what activists there have been claiming for more than a week: that, contrary to claims that it is reducing its military presence in the territory, Jakarta has actually been dispatching more troops, including members of the notorious special forces, Kopassus.

One Western official said: "They are moving in more numbers than they have withdrawn." He said that in the past few days there had been at least one military clash between Indonesian occupying forces and members of the East Timorese resistance in the territory's capital, Dili.

Diplomats are puzzled by the timing of the alleged troop movements which come at a moment of cautious optimism about prospects for a settlement in East Timor, annexed by Indonesia in 1976. The Indonesian foreign minister, Ali Alatas, has spoken of a plan for East Timorese "autonomy".

Last night the British Foreign Office minister, Derek Fatchett, left Jakarta after a flying visit during which heraised the reports of a military build-up with President BJ Habibie and Mr Alatas. "They said to me that there had not been an increase in troop numbers," Mr Fatchett told The Independent yesterday. "President Habibie talks about it as a change from aggressive troops to 'territorials'."

British diplomats in Jakarta said that they had been unable to confirm the reports independently, but were monitoring the situation.