Reuters in Sydney – With President Wahid fighting for his political survival and his supporters vowing to lay down their lives for him, aid agencies are preparing for a humanitarian crisis.

Jeremy Hobbs, executive director of Oxfam Community Aid Abroad, said the Australian charity already had contingency plans for a humanitarian catastrophe.

The commander of the US Seventh Fleet, Vice-Admiral James Metzger, said yesterday US military commanders had agreed in March they were more likely to have to deal with a tide of refugees in the Western Pacific than a war. "It's a capability that we need to make sure we have, and continue to exercise, be prepared for and plan for," he said.

Security analysts say the danger of bloodshed spreading across the Indonesian archipelago and sparking economic chaos and a huge outflow of refugees is remote but real.

"Indonesia has really struck an iceberg here and it's sinking," analyst Carlyle Thayer, of the Asia-Pacific Centre for Security Studies in Hawaii, said. He said multilateral military exercises were designed to maintain the ability to offer humanitarian assistance in Indonesia should it be necessary.

Even United Nations-run East Timor, ransacked by Indonesian-backed militia after it voted to break free from Jakarta in 1999, is prepared to help. "We have urged our people that in case of a humanitarian crisis in Indonesia, and if there are refugees seeking protection in East Timor ... we must welcome them with open arms," foreign affairs spokesman Jose Ramos-Horta said.

Australia-based Indonesia experts said Mr Wahid's position had become untenable. "Whether the country breaks up is one question, but I think there is an even chance of it breaking down," former Australian foreign minister Gareth Evans said.

Basoeki Koesasi, convener of the Indonesia section at Melbourne's Monash University, said the devotion of Mr Wahid's supporters should not be underestimated.

But John Ingleson, a University of New South Wales historian of Indonesia, said he believed Mr Wahid would back off before leading his country into violence. "The danger is, the longer he plays the game of bluff publicly, I don't think he will be able to control his followers," he said.