Jakarta – US retired General Anthony Zinni on Thursday said he was optimistic peace could prevail in Indonesia's troubled Aceh province if Jakarta and separatists push for talks.

Gen Zinni, Washington's Middle East envoy, met top security minister Susilo Bambang Yudhoyono in Jakarta after a three-day visit to Aceh in his capacity as a mediator between the separatist Free Aceh Movement (GAM) and Jakarta.

"I think this is a problem that can be resolved through dialogue and through hard work in the areas of security, political dimensions and security dimensions," he said.

"I think all sides are convinced that the way to peace is through dialogue and I'm convinced we have a momentum now," he said, adding all sides should cooperate to build the momentum into a peaceful resolution.

Asked if Jakarta's Aceh policy was on the right track, he said: "I believe it is. What we lacked in the past was a framework but now both sides are coming together and beginning to frame that." Mr Susilo has said a new Aceh policy would be announced this month. Last week President Megawati Sukarnoputri vowed tougher measures against the rebels while also offering dialogue.

Gen Zinni, an adviser to the Geneva-based Henry Dunant Centre that facilitated talks between Jakarta and the rebels since 2000, said Acehnese needed "a strong sense of security" and a mechanism to express their concerns.

The talks in Switzerland have yielded a series of fragile ceasefires that had only brief lifetimes, with both sides accusing each other of bad faith. GAM has been fighting for independence since 1976.

Gen Zinni said a date for the next round of talks had yet to be decided but he hoped it would be "relatively soon". Mr Susilo said the government would prefer the talks to be held in Aceh to involve all province parties.

The same day, GAM said government troops shot dead two high school students. They denied army claims that the victims were GAM members killed during an exchange of fire.