Agencies in Jakarta and Banda Aceh – Indonesia's new Foreign Minister, Hassan Wirayuda, said yesterday there was still room for peace talks in the troubled northern province of Aceh, where more than 1,100 people have been killed this year in escalating separatist conflict.

But Mr Wirayuda's comments seemed ill-timed, coming a day after the worst massacre in Aceh in two years. At least 30, possibly 38, civilians were killed on a palm oil plantation in an attack the separatist Free Aceh Movement (GAM) and the military blamed on each other. The civilians were lined up and shot dead on the estate where they worked in East Aceh.

Mr Wirayuda, a career diplomat, has been leading the Indonesian Government in largely fruitless talks with GAM rebel representatives in Geneva since early last year. The latest talks broke down last month and Jakarta subsequently suspended two joint rebel-government committees that were monitoring security and humanitarian affairs, arresting six of the rebel members soon afterwards.

"There is still room for dialogue among all elements of Aceh society to find a peaceful resolution," Mr Wirayuda said. "I think there is still room to create an atmosphere for dialogue with all groups, including non-government organisations." There were fears in Aceh that the massacre toll would rise. A doctor from the nearby town of Idi Rayeuk said 30 bodies, including that of a three-year-old boy, had been brought into the hospital from the Bumi Flora Afdeling IV plantation. Seven people had been injured, six of them critically.

"Whether there are more victims out there is not clear and we're not game to go out there ourselves, as it's still extremely dangerous because troops are sweeping the area intensively," the doctor said. The corpses had been sent back to the plantation for mass burial, he added.

The military, blaming GAM, put the death toll at 38, with seven injured. The national armed forces chief, Admiral Widodo Adisucipto, said the rebels were to blame. "I have instructed my forces to find the GAM perpetrators," he said. "According to our reports, GAM massacred the plantation workers and stole their wages." Aceh military spokesman Lieutenant Colonel Firdaus said GAM guerillas had ambushed the plantation workers as they were going to collect their wages.

"Then they were lined up and sprayed with bullets," he said, claiming the guerillas wanted the workers' wages. "Maybe this time the workers didn't want to give their money away so they were slaughtered," he said.

GAM denied any involvement and accused the military of carrying out a revenge attack on the civilians for what it said was the killing of 25 soldiers by GAM the day before.