Dili – East Timorese celebrated a peaceful Christmas on Sunday as church and political leaders called on them to reject violence which earlier this year forced 15 percent of the population to flee their homes.

"At Christmas this year, everyone should start leading a better life... there are too many problems in Timor. Leave bad habits and live God's way as a true Catholic," Dili Bishop Monsignor Alberto Ricardo da Silva told the congregation said as he celebrated Midnight Mass.

"With the suffering and darkness that we are experiencing, we need to purify ourselves to get back peace and love," he told 3,000 Roman Catholic worshippers who packed Dili's cathedral.

Around 90 percent of the population of East Timor is Catholic.

The bishop's appeal did not dampen the holiday spirit as Timorese used the traditional Portuguese greeting to wish each other "Boas festas do Natal de 2006".

President Xanana Gusmao in his Christmas message called on everyone to join the national reconciliation process he initiated.

"In the spirit of Christmas, we all should make the effort to love each other and participate in the national reconciliation process... we should all have one spirit, thoughts... and objective to work together for the sake of our country," he said.

Youths gathered at street corners to celebrate under the decorations and dance along to festive tunes but there were none of the convoys of cars and motorcycles around the city which have been a regular feature of previous Christmases. Fireworks also intermittently illuminated the sky.

Thousands of people who fled the violence earlier this year spent Christmas in temporary camps. Many have no homes to return to as their houses were destroyed while others feel the security situation remains precarious.

In a refugee camp in Colmera district of Dili, youths danced to a song calling for an end to the regional discrimination which had triggered the April and May violence.

UN Police spokeswoman Monica Rodrigues said Dili was relatively peaceful during Christmas, despite some isolated incidents.

East Timor was rocked in April and May by clashes between security force factions which quickly degenerated into street violence involving youth gangs.

At least 37 people died in the bloodshed which prompted the deployment of 3,200 Australian-led peacekeepers to restore calm.

Their numbers have since been reduced to around 1,100, bolstered by the presence of about 1,000 UN police.