Don Greenlees, Jakarta – A confidential Australian embassy report on the killing of East Timorese civilians in the town of Liquica concludes that allegations of a massacre are plausible and accuses the Indonesian military of colluding with militia forces in the lead-up to the incident.

The report prepared by two Jakarta-based diplomats also confirms the military failed to take steps to stop the killings in the grounds of the Catholic church in Liquica on April 6 despite being present in some numbers.

Evidence of a direct role by military personnel in the attack at the church and in violence outside Liquica the previous day is only circumstantial, according to the report, but includes gunshot wounds from weapons of a type issued to the military.

The report, handed to Alexander Downer on Wednesday, strengthens the case for Australia to take a tougher line with Jakarta to improve security in East Timor and exercise greater control over the military.

Opposition foreign affairs spokesman Laurie Brereton has called on the Foreign Minister to release the report and be more assertive in pushing Indonesia to disarm militia groups and ensure the military act in accord with President B.J. Habibie's policy on East Timor.

Although diplomats have qualified their findings by pointing to the lack of genuinely independent sources, they found enough testimony and evidence of a substantial number of killings to warrant a detailed and impartial investigation. But they avoided using the term "massacre".

Their conclusions lend some credibility to claims by the Bishop of Dili, Carlos Belo, of a Liquica church death toll in excess of 25. Other human rights groups have produced the names of up to 50 people they say died in the churchyard. The Indonesian Government puts the toll at five.

The quick disposal of bodies and an attempt to remove bloodstains and cover up bullet holes at the house of Liquica's Catholic priest has made it difficult to confirm the death toll and gather evidence.

The Australian diplomats – a military officer and civilian bureaucrat – visited Liquica four days after the attack and interviewed numerous witnesses, activists, government officials and military commanders.

They found the military co-operated with the pro-integrationist Besi Merah Putih (Red and White Iron) militia in the lead-up to the attack, including with transport and logistical support.

During the attack on the church, the diplomats confirmed security personnel stood behind the mob of militia, firing their weapons in the air which increased panic among those villagers taking refuge.

They argue the 80-odd personnel in and around the town did not take up opportunities to restrain or head off the brutal attacks by militia on villagers. Local military commander Lieutenant Colonel Asep Kuswanto was said to be in the town but not actively involved in the events at the church.

But the report's conclusions will bolster claims by a variety of observers that the military is actively sponsoring the campaign by militia and paramilitary groups to keep East Timor a part of Indonesia.

In the wake of the attack, the Indonesian Government agreed to set up an independent commission to help solve the conflict and promote human rights. It has invited independent observers, including the International Committee of the Red Cross, to investigate the violence.

But the ICRC claims threats by the militia have prevented Dili-based staff from assessing the humanitarian needs or investigating the violence.