Agence France Presse, Cassa – The armed men involved in a fatal clash with international peacekeepers in East Timor were from a feared militia that has committed a series of atrocities, witnesses said yesterday.

Residents of Cassa, a mountain village, said the attack on Wednesday was carried out by members of the Mahidi (Live or Die for Integration) militia, whose leader Cancio Carvalho is based in the village.

Villagers said the militia had tied one man to a steel-framed chair with wire and burned him alive. The chair, wire and the charred remains of the man were visible yesterday outside Carvalho's headquarters.

"They tied him to that and set him alight after stabbing him in front of the whole town on the soccer field," said Armandio de Jesus, a former UN employee.

The Mahidi, which has threatened to wage guerilla war to prevent East Timor severing its ties to Indonesia, also raided the nearby village of Hatohudo on Sunday, beheading one woman and killing five others, residents said.

"There was a lot of shooting. They came in trucks. We all ran," said Aniceto Xavier, 31. "The militia cut the head off the lady and put her head on an oil drum in the middle of the road."

Mr Xavier said the militia had told the people they should go to Atambua, across the border in West Timor, or they would be killed.

Mahidi has virtually destroyed Cassa – about 70km from the border with West Timor – forcibly removing many residents.

Two militiamen were killed on Wednesday when they ambushed an Australian patrol near Suai. Two Australian soldiers were injured.

Residents of Cassa said about 500 people had been loaded on to a convoy of militia trucks and stolen United Nations vehicles and driven across the border. Only about 100 people remained in the town, many of them women and children.