Belinda Tasker, Sydney – The Balibo Five were shot by Indonesian military chiefs after trying to surrender, and had their blood smeared on a painting of an Australian flag, a coronial inquest has heard.

A former East Timorese citizen made the stunning claims as the inquest into the death of Brian Peters, one of five Australian-based newsmen killed at Balibo, resumed yesterday after a two-month break.

The five were shot at Balibo in East Timor on October 16, 1975, during the invasion of the former Portuguese territory by Indonesian forces.

Antonio Sarmento, who now lives in Queensland, testified that an Indonesian journalist who saw the killings had told him of the incident. Mr Sarmento said the journalist had travelled by helicopter with Colonel Dadin Kalbuadi, who commanded Indonesia's border troops, from Batugade to Balibo early on October 16.

"He said when the (Indonesian military) regional commanders arrived in Balibo, the five journalists raised their hands and they told them 'we are Australian journalists' and then they just made like a brief inquiry and then they shot them," Mr Sarmento told Sydney's Glebe Coroner's Court.

"He told us that one of the soldiers took the blood of one of them and painted it on an Australian flag (painted on the side of a house the newsmen had been staying in at Balibo)."

Official government reports have said the five newsmen were killed in crossfire between Indonesian forces and Fretilin troops. But East Timorese eyewitnesses have told the inquest the men were executed and their bodies burnt.

Mr Sarmento said the journalist also told him the Indonesians had stripped the newsmen's bodies of their clothes and dressed them in the uniforms of Fretilin soldiers. The bodies were then placed on top of machine guns "to make out they had been killed while fighting", he told the court.

According to the journalist, the five bodies were then placed in a house with mattresses and set alight.