Jakarta – The government today raised the possibility of granting independence to the disputed half-island of East Timor for the first time since Indonesia annexed the territory 23 years ago.

East Timor, with a predominately Roman Catholic population of 800,000, has been wracked by bloodshed and human rights abuses since mainly Muslim Indonesia occupied it in 1976.

For years, thousands of troops have been fighting a small band of East Timorese rebels, and Indonesia has come under increasing international pressure to settle the problem. "If they want to have their freedom, they are welcome," Foreign Minister Ali Alatas said today at a news conference.

Information Minister Yunus Yosfiah quoted President B.J. Habibie as saying that Indonesia's highest legislative body could take up the issue later this year of East Timor's leaving this southeast Asian nation. The People's Consultative Assembly, or MPR, could consider the issue if the East Timorese reject Indonesia's offer to grant them greater autonomy, he quoted Habibie as saying.

Yunus, an army general who took part in Indonesia's 1975 invasion of the former Portuguese colony, said Habibie made the comments at a meeting of senior ministers. The comments follow growing international pressure on crisis-ridden Indonesia to settle the lethal dispute over East Timor, a former Portuguese colony 1,200 miles east of Jakarta, Indonesia's capital.

Three people were killed last weekend and 1,500 villagers were being sheltered by the Catholic church after clashes between pro-and anti-independence groups.

Portuguese President Jorge Sampaio, whose government is involved in peace talks with Indonesia on East Timor, described Yunus' comments as "a positive contribution to move (the issue) forward."

However, Roque Rodrigues, the Lisbon representative of the National Council of East Timor Resistance – a grouping of pro-independence movements – said he was "very skeptical" about the remarks.

Jose Ramos-Horta, co-winner of the 1996 Nobel peace prize for his efforts to find a solution to the East Timor dispute, also cast doubt on the credibility of Yunus' remarks. "The comments contrast sharply with the real situation on the ground in East Timor where there are acts of true savagery and complete inhumanity against the civilian population," he told Portuguese state radio Antena 1.

Alatas, the Indonesian foreign minister, said Habibie's plan was a response to suggestions by other governments, including neighboring Australia, that East Timorese people be allowed a form of self-determination. Indonesia annexed East Timor as its 27th province in 1976.

Alatas said the prospect of granting independence "is the last alternative if the people of East Timor continue to reject our offer for special autonomy." He said it would be up to the MPR to decide. "Indonesia gains no economic benefit during 22 years of integration," Alatas added. "The government always has to support this region."

Indonesia has steadfastly rejected the need for a referendum on East Timor and instead has put forward the offer of autonomy at UN-sponsored talks with Portugal. Until now Habibie has rejected the idea of East Timor leaving Indonesia, which is grappling with increasing civil unrest amid the worst economic crisis in 30 years.