Hamish McDonald and Desmond Ball – As an army major with access to the most highly classified intelligence flowing into Canberra, Chris Jones admits he used to feel tempted when he saw protests against the Indonesian occupation of East Timor back in the late 1970s.

"I was passing a demo about Timor in Adelaide once," he recalls. "I felt like getting in and telling them 'This is what I know' - but I never would."

Just what he knew would have rocked the Australian public in those days. Even now, it sits like a diplomatic time bomb in the top secret archives of the Defence Department in Canberra.

The material Jones saw as a desk officer in the former Joint Intelligence Organisation (JIO, now called the Defence Intelligence Organisation) contained damning detail about the brutality of the East Timor occupation, in which up to a third of the population, or 200,000 people, may have died.

In 1978, Jones took over one of the JIO's most closely protected projects, the compilation of a history of the Indonesian invasion and occupation of the former Portuguese colony, based almost entirely on signals intelligence.

The project had started under the late major John "Pepe" Florint, and was handed over to Jones when Florint transferred to the newly formed Office of National Assessments in 1978.

When completed in January 1979, only two copies were made - and held in a safe close to the JIO director's office. Later that year, JIO decided to produce a further 16 copies, which were circulated among other Australian and allied intelligence services.

Confirmation of its existence has come as a by-product of the search by the Inspector-General of Intelligence and Security, Bill Blick, for material relating to the Balibo killings, reported in the Herald yesterday.

The book itself is said to contain only a passing mention of the newsmen's deaths, though it has sometimes been confused with an accompanying collection of signals intercepts on the Balibo attack that was kept in secure vaults at JIO until handed back to the Defence Signals Directorate in 1986.

Blandly titled The Indonesian Integration of East Timor, the work became known simply as "The Blue Book" among the limited circle of senior intelligence officials given access - who say it is a masterly example of what secret intelligence can produce.

The period it covers includes the harshest times for the East Timorese, when Indonesian forces shot and pillaged their way through the territory's towns and villages, displaced rural populations to starve in holding centres, and induced widespread famine to break the guerilla resistance.

Jones, now a business consultant in Western Australia, says the eight-chapter book is a harrowing record. "You'd cry if you read it," he says, adding: "The truth must come out some day."