Jakarta – The heads of warring factions in East Timor Thursday said they had agreed to work towards peace after a landmark meeting on hostilities in the strife-torn territory.

"We both agreed to put down our guns, stop terrorizing one another and making false statements, because for the past 23 years we have been enemies," pro-Indonesian militia leader Joao Tavares said here after a one-hour meeting with rebel chief Xanana Gusmao.

"Peace will start today," he said in a joint press conference with Gusmao held in three languages – English, Portuguese and Indonesian – in which the two symbolically embraced one another.

But Gusmao said a ceasefire was not yet a reality. First, he said, he had to study a document given him by Tavares. "This agreement we made is to create a peaceful atmosphere," Gusmao said.

"We have agreed to create, from the top down, an atmosphere where people can be respectful to each other, stop the violence, and eliminate the hate," he added in Indonesian.

"Depending on the situation, we can go [from] this meeting as a beginning of a possible cease fire. The most important thing is that we have both agreed that starting today we will try hard, including those in the armed groups, among the youth groups and among the people themselves to try and create a peaceful situation."

The Gusmao-Tavares meeting Thursday was held in the office of the director general of correctional facilties, a last minute compromise between Gusmao, who had wanted it held in the house where he is being held following his transfer from prison, and the pro-Indonesians, who refused to go there.

Observers here noted Gusmao's previous position had been that any ceasefire in the former Portuguese colony invaded by Indonesian in 1975 should be with the Indonesian armed forces, not with the Indonesian-army raised and armed East Timorese militia, represented by Tavares.

Last week, Gusmao told a French journalist: "Who is Tavares, he is nothing. He has proclaimed himself commander in chief but I don't remember seeing him in the jungle fighting."

But Gusmao, who is serving a 20-year jail sentence for armed rebellion against the state, sounded a note of hope the talks could and should continue.

"I think all East Timorese people are conscious it is time to do something to put an end to 23 years" of conflict Xanana said.

"We realize it is time to make peace [among ourselves]," he added referring to a sudden offer by Jakarta of broad autonomy or independence after decades of virtual military occupation.

Asked what the next move was, Gusmao replied in Portuguese: "From here we try to build mutual respect and try to avoid all the bad feeling that we have [had] in the past 23 years."

Gusmao led the armed wing of the Fretilin independence movement in East Timor before he was caught by Indonesian troops in November of 1992. He has said that if free choice is given to the people of East Timor he is sure they will opt for independence, not autonomy.

He told US Secretary of State Madeleine Albright last week that he envisaged East Timorese from both sides – the pro-independence and Indonesian-armed militia – forming a united police force with the help of the United Nations.

On East Timor, the state news agency Antara reported Thursday that at least 2,400 Indonesians had fled in the past two weeks, fearing their time in the former Portuguese colony was over.

Antara quoted Saidoe, the district chief of Buton in southeast Sulawesi island, as saying 422 settlers arrived aboard two ships on Wednesday in anticipation of rising unrest.