Greg Earl, Dili 00 It's about 500 metres from the squat Indonesian government architecture of the Dili port to the old Portuguese-style Motael church on the city's waterfront. For Dili's residents pondering the future of East Timor at the weekend, the contrast between the port and the church underlined the division in the city.

As people left the church after a Catholic Mass in the native Tetum language early yesterday morning, they talked optimistically of transitional autonomy towards the long-sought goal of independence.

In a striking display of new-found bravado, one young man sported a distinctive blue T-shirt proclaiming in Portuguese: "Resist and win. Referendum for East Timor."

But on Saturday night the Bugis traders, who have flooded into the disputed province from Sulawesi under Indonesian rule, were voting with their feet at the wharf.

An inter-island transport ship, the Multi Sejahtera, was packed for repatriation: a dozen new cars and trucks filled with goods, 1,100 local cattle and a few dozen Bugis heading back to safety. "There are no more projects," said one migrant construction worker, blaming a slowdown in central government spending in the potentially independent nation.

One man lamely claimed he was bored, but conceded that he had already sent his family back to the city of Ujung Pandang in the first wave of evacuation by an ethnic group renowned for its aggressive pioneering of new trade routes.

Transitional autonomy might sound good to the long downtrodden East Timorese, but it's the end of the road for the Bugis because the Indonesian Government has now rejected the idea of a long and phased path to independence.

Earlier on Saturday in the town of Balibo, just across the border from West Timor, a group of villagers showed how fast the news of Indonesia's new policy had travelled with their unexpected grasp of the intricacies of independence politics.

They also backed transitional autonomy, saying that the latest fighting between pro-and anti-independence groups showed East Timor wasn't ready to go it alone right now.

One man said the Catholic Church was the best institution to call community leaders together to reach an agreement. "It could take one year, one month or one week," he said of the proposed community discussion.

But the time for discussion might be quickly disappearing. Pro-integration supporters staged a brazen display of force outside Dili's Mahkota Hotel on Friday by firing their newly acquired guns in the air.

As the local military commander Colonel Tono Suratman met pro-Indonesian Timorese inside the hotel, the integrationist militia members opened fire without any casualties to stop a demonstration by independence supporters.

Photographs of young men holding automatic rifles and guarding cars were run on the front page of East Timor's main newspaper on Saturday, reinforcing the message that militias are now taking over the public security role from the Indonesian army.

Human-rights groups last week warned that Indonesia's decision to allow the arming of local militias could disrupt any peaceful transition to autonomy by triggering serious violence before any talks could be held.

That now already appears to have been the case, with more than 4,000 people seeking refuge in a church in the south-coast town of Suai at the weekend after alleged attacks by newly armed pro-integrationists. Six people have reportedly been killed in the area.

But prominent human-rights activist Mr Florentino Sarmento said 30 pro-Indonesian Timorese had now been killed by independence supporters who had burnt integrationists' homes. Integrationists were using their new guns to defend themselves but were also misusing the weapons to attack independence supporters.

Hopeful talk at the Motael Church of transitional autonomy might be quickly eroded by the emergence of old rivalries. In Balibo, a villager warned of dark organisations that had sprung up to create fear in villages to the south.