Dili – Two years after street violence in East Timor left dozens dead, many displaced by the unrest say they no longer fear violence, but are unable to return because their homes were destroyed.

Grigorio Sousa sits outside his tent in a makeshift camp in East Timor's violence-scarred capital and hugs his son as he speaks longingly of one day returning home.

Sousa, 32, is one of nearly 7,000 refugees still living in the converted convent after fleeing their homes in 2006. Sousa, who ekes out a living in the camp selling food and cigarettes, is hoping the government will help him and his family find a new home in his native village.

"I really want to go home as soon as possible, but I do not know where I could go after here. That is why I am still living here," he said. "If the government gives us the choice and helps us financially, I will return to my village."

Some 155,000 people – about 15 percent of East Timor's population – were estimated to have fled their homes in April and May 2006 amid the sudden bloodshed that followed the sacking of deserting soldiers. Ethnic divisions arose among people from the east and west, dividing neighbourhoods.

An estimated 100,000 people are still living away from home, 30,000 of them in camps in the capital, Dili – a situation the International Crisis Group (ICG) has described as a "humanitarian tragedy."

"The government thought that once the immediate crisis was over, the IDPs (internally displaced persons) would return home, but many no longer had homes to return to, or no longer felt safe to go back," the think tank said in a report last month.

Filomena Soares has lived in the camp with her family since their home in the west of the country was set on fire during the unrest because her husband came from the east.

"We don't have a home to go back to. Even if we wanted to leave, where would we go? We can't just live under the stars," said the 32-year-old mother of two, who sells street food to support her family.

"We are ready to go back if the state provides us with financial assistance to repair our home and make it liveable again," she added. "Security is not a problem for us now, the people there want to welcome us back."

Since rebel leader Alfredo Reinado was killed in the February attacks on East Timor's president and prime minister, several hundred families have left the camps and returned home. Nearly 6,000 more have registered their desire to be resettled, Deputy Prime Minister Jose-Luis Guterres told an international donors' meeting in March.

But the ICG said that for some, free food and shelter in Dili was proving hard to give up, particularly as the capital offers better economic opportunities than rural areas of East Timor.

A World Food Programme (WFP) survey conducted last September showed half the 73,500 people receiving food aid did not need it as they received an income from paid employment or other sources. Rations for those living in the camps were halved in February and this month the WFP stopped providing food altogether, saying it did not want IDPs to become dependent on the handouts.

"(The survey) found that if food aid was stopped, half of the people in the IDP camps would have no problem. The other half needs assistance, but not just with food," Joan Fleuren, the WFP country director for East Timor, told AFP.

Fleuren said the WFP was now focusing on helping vulnerable people in the population as a whole, rather than just the IDPs.

Unemployment is high in East Timor, where the average income is just 50 cents per day, according to World Bank figures. A 20-kilo bag of rice costs around 18 dollars.

For those living in the camps, the government has stepped in to provide a monthly ration of four kilos of rice.

"The crisis is over," Maria Dominggas Alves, minister for labour and community reinsertion, said. "Now it is the government's responsibility to give the IDPs aid, starting in April and until they all move out."

But the government concedes that rehousing East Timor's displaced, some of whom have had their homes occupied by squatters in their absence, will be a slow process.

"It will take time, but we are all working hard and some of the IDPs have now gone home," Guterres told AFP. "I believe that we will reach a time when no one will live in camps anymore."