Mark Dodd – East Timor Prime Minister Xanana Gusmao has threatened to arrest local journalists, claiming inaccurate news reporting in the troubled territory is contributing to national instability.

Mr Gusmao told reporters they faced arrest if they persisted with reporting as fact rumours and other unsourced claims.

The former president and veteran pro-independence leader slammed local media over recent interviews with Major Alfredo Reinado, an army rebel and key figure in the 2006 unrest that brought the tiny nation to the brink of civil war.

"You have to exercise more responsibility towards the environment of stability or instability," he said.

"We (government) close our eyes when in the cause of small and big things (stories) you go and interview Alfredo (Reinado). Perhaps because of these things, instability may emerge in the country – because of you – (so) we will arrest you."

Mr Gusmao said 2008 was a year of reform in East Timor and that would include the local media. The Australian understands Mr Gusmao was particularly incensed by false reports that two people had been killed during civil unrest in the Caicoli neighbourhood in Dili.

"The TV and radio report that people have died, and you (media) just report it without going and asking," Mr Gusmao said. "If we talk about reforming society, we must also talk about reforming you (media)."