Jill Jolliffe – An argument over who is to be East Timor's first ambassador to Australia could lead to a showdown between President Xanana Gusmao and Prime Minister Mari Alkatiri.

Former Melbourne tram driver Abel Guterres is the first choice of Foreign Minister Jose Ramos Horta and Mr Gusmao, but has apparently been vetoed by the Prime Minister who is backing Antoninho Bianco, a Jakarta-educated Fretilin member who has occupied key positions in two governments led by Mr Alkatiri.

In an interview yesterday with The Age, Mr Horta said the choice of ambassador was "still to be agreed between the President and the government – various names are floating about".

However, in an interview on June 13, Prime Minister Alkatiri was adamant that Mr Bianco had been nominated, a statement confirmed by Mr Bianco, who said he expected to present his credentials in October.

Confronted by this declaration, Mr Horta said the nomination could not be presented "as a fait accompli", stressing that the final say rested with President Gusmao who has to ratify diplomatic appointments.