Louise Williams, Dili – The East Timorese Bishop Carlos Belo says a "transitional solution" to the protracted Timor conflict must include the immediate granting of special status to the contested province and the release of the jailed independence fighter Xanana Gusmao.

Bishop Belo's statement came after a week of escalating protests in the provincial capital of Dili and in Jakarta, and students here warned they would maintain the pressure on the Government of Dr B.J. Habibie to offer new concessions to break the deadlock in the 23-year-old struggle against Indonesian rule.

Speaking for the first time to the foreign press about Mr Habibie's recent suggestion that he might consider special status for the province, Bishop Belo said: "I would like to see it immediately put into practice. It could be a transitional solution."

However, a "definite solution" to the conflict which the East Timorese say has cost more than 200,000 lives must come "from the people", he said.

Dr Habibie said recently: "We are going to keep East Timor what it is – an integrated part of Indonesia." However, he also said: "I tell you, I'm really, really honestly considering releasing Xanana and intergrating all the Timorese [guerillas] who are still in the mountains into the society."

Bishop Belo, awarded the Nobel Peace Prize in 1996 with the East Timorese pro-independence spokesman Mr Josi Ramos-Horta, said it was "not proper" for the Catholic Church to broker a solution, but he would be prepared to accept any invitation to take part in new talks.

A solution must be worked out by "political leaders" and the key to a solution was continuing dialogue, he said. The predominantly Catholic East Timorese people regard Bishop Bishop as their leader and his recent call to refrain from violence has prevented clashes in Dili.

He stopped short of specifically calling for Xanana to be brought into negotiations, but said all political prisoners, including Xanana, must be released from prison. The students said they would continue their campaign of protests today to push for Xanana's release and the immediate withdrawal of Indonesia's military forces in the province.

The East Timorese conflict is one of the most difficult for the Habibie Government because more democracy nationally implies more rights for the East Timorese people and a curb on the military's heavy-handed repression.

[According to a report by the news agency Lusa, at a Sunday mass in Dili on June 14, Belo said that a referendum could create division among Timorese and urged the supporters of the initiative to be patient. Lusa quoted him as saying "Maybe we can prepare it ...but they must be aware that we have first to prepare a dialogue" and warning that there were "sinister forces" which were seeking to create antagonism between Timorese. He was also quoted by the Australian as saying that the people patient and wait between 10 to 15 years before voting in a referendum - James Balowski.]