Canberra – Australian diplomats in Indonesia have warned in a series of confidential diplomatic cables that an independent East Timor would collapse into chaos and violence, according to a newspaper report on Friday.

The Melbourne Age newspaper said the cables warned that as many as 15,000 people could flee their homes in East Timor if the territory won independence from Indonesia. The cables predicted an escalation of violence, a breakdown of basic services and economic collapse, the newspaper reported.

It said the documents also showed Australia expected to have some military involvement in East Timor and was working closely with the United States and Canada on its aid response.

One of the cables, written by an official of the government aid body AusAID, said the Timorese resistance movement expected to put "active guerrillas" and exiles into administrative, technical and professional positions in a new government.

That cable, sent to Australian Prime Minister John Howard, Foreign Minister Alexander Downer and Australia's defence and intelligence organisations, warned a non-East Timorese exodus would have dire consequences for the economy and services.

"We understand that only one doctor is East Timorese and the vast majority of technicians staffing government-owned water, power, postal and telecommunications are non-East Timorese," the newspaper quoted the cable as saying.

It said non-East Timorese controlled 75 percent of the formal economy. "Private investment ... is expected to dry up in the short term," it said. "Prices are expected to increase, particularly given that East Timor is a net importer of goods and reliant on a non-indigenous transport infrastructure."

Aid to the province would have to focus on the need to staff essential positions and stockpile food, medicines and equipment to help them, it said.

One of the cables also indicated that Australia may not wish to take the lead role in a coordinated aid effort, a statement which conflicts with Downer's official comment this week that Australia would have "no choice" but to take the primary role.

Downer will travel to Indonesia next week where he will meet with Indonesian President B.J. Habibie and detained East Timorese guerrilla leader Xanana Gusmao. He said on Thursday the meetings would allow him to canvass a wide range of opinions on East Timor.

The Australian government has said it will support independence for the province, although it would prefer it became an autonomous state within Indonesia or there was at least an orderly transition period to independence.

Indonesia has said it wanted to resolve the issue by January next year and said it will consider granting independence if an offer of special autonomy is rejected.

Indonesia invaded the former Portuguese colony in 1975 and annexed it the following year in a move not recognised by the United Nations.