Lisbon – East Timor's first transitional government was hailed yesterday as a crucial step forward by the pro-independence leader Mr Xanana Gusmao.

Comprising members of the pro-independence National Resistance Council for East Timor (CNRT) and UN officials, the body unveiled yesterday replaces the UN transitional authority in a bid to speed up the "Timorisation" of the territory as a precursor to independence.

After a meeting in Lisbon with Timorese political leaders, Mr Gusmao hailed the formation of the new authority as a crucial step forward to full independence, the Portuguese news agency Lusa reported.

"I have attempted to create a team spirit in which we can take responsibility for our errors as well as our successes," Mr Gusmao said. "This meeting has allowed us to make the first steps along the road to democracy in a spirit of collective responsibility."

Former resistance leaders in the transitional government are Joao Carrascalao, from the Timorese Democratic Union, who takes over infrastructure, and Mari Alkatiri, from the Revolutionary Front for the Independence of East Timor, who has charge over the economy. Father Filomeno Jacob is responsible for social affairs and Mariano Lopes the interior.

Mr Alkatiri said the formation of the "government of cohabitation" would focus on creating a political climate for East Timor's eventual full independence. "It is an important step, but we have to find a way to avoid break-ups ... and create a solid cohabitation," he said.

The international officials named to the body by Sergio Vieira de Mello, the UN official responsible for East Timor, were his deputy, Jean Christian Cady, for emergency services and police, Gita Welsh for justice, Michael Francino for finance and Peter Galbraith for political affairs.