Lewa Pardomuan, Jakarta – Jailed East Timor rebel leader Xanana Gusmao Friday called for a cease-fire in his troubled homeland after Indonesia said it may free the territory after 23 years of bloody military-backed rule.

"I think Indonesia should start disarming the people, ABRI (the armed forces) should reduce its troops and if possible make an agreement with us to cease fire," he told reporters at Jakarta's Cipinang prison where he is serving a 20-year term.

Pro-independence guerrillas have been waging a low-level rebellion against Indonesia since it invaded the former Portuguese colony in 1975.

Pro-Jakarta and pro-independence forces have also clashed frequently recently, killing at least six people and sending thousands of villagers fleeing from their homes. Indonesia's official Human Rights Commission says at least 50 people have died in fighting in the past six months.

Gusmao also said he would accept Indonesia's offer of de facto house arrest in Jakarta. Bowing to mounting world pressure, Indonesia Wednesday said it would move Gusmao from prison to a house and ended 23 years of opposition to independence for East Timor, saying it may consider freeing the territory after the national election on June 7.

Gusmao welcomed Indonesia's change of heart, but said the battered territory needed time to prepare for independence. "It's better late than never," he said. "Implicitly, the Indonesian government has recognized our right to self-determination, to independence," Gusmao said. "We are delighted by the decision ... but the settlement needs more time and effort."

However, he rejected warnings by pro-Jakarta groups that speedy independence would spark civil war, saying East Timor could manage if it were freed tomorrow.

Indonesia's rule in East Timor has never been recognized by the United Nations or most foreign governments.

In East Timor, aid workers and locals said Friday bloody clashes between rival Timorese groups were hitting the troubled territory daily.

The divisions are fuelling fears of a return to civil war if the eastern half of Timor island does regain the independence it briefly enjoyed in 1975 between Portugal's departure and the Indonesian invasion. Indonesia annexed the territory in 1976.

Pro-Jakarta Timorese say they will fight to protect themselves if Indonesia walks away. "If East Timor decides to be independent, then we are ready ... we are ready to fight," said Basilio Dias Araujo, a pro-Indonesia activist working in the governor's office.