Agencies in Dili and Jakarta – East Timorese resistance leader Jose Ramos Horta claims Indonesian troops have launched a major offensive against separatist rebels in the province.

The exiled Nobel Peace Prize laureate, citing separatist sources, said on Sunday in Austria that 2,000 troops, backed by helicopters, had attacked rebels near Los Palos in the east of the former Portuguese colony on Friday.

The Indonesian military yesterday rejected his claim. A military spokesman in East Timor said the accusation was part of a disinformation campaign against Indonesia, which has opened peace talks with Portugal under the auspices of the United Nations. "There was no attack in Los Palos and we're not conducting combat operations any more," Lieutenant-Colonel Supadi said from Dili, the capital of East Timor.

Colonel Supadi said the military was on alert in case of demonstrations on the anniversary of a massacre of separatist protesters at Santa Cruz cemetery in Dili on November 12, 1991. The military is also investigating whether separatists were involved in the killings of two soldiers, a policeman and a civilian on Friday and Saturday. A third soldier is missing.

Mr Ramos Horta's fellow Nobel laureate, Bishop Carlos Belo, said yesterday jailed guerilla leader Xanana Gusmao had to be included in peace efforts, saying the problem would never be settled without him. Bishop Belo said participants in UN-sponsored talks, which started yesterday in Austria, should push for Gusmao's participation.

Among issues that might be discussed, Bishop Belo said, were the feasibility of creating political parties, the holding of elections and the formation of a transitional government, a judicial system and a local defence and security mechanism.