Linda Mottram: Australian troops in East Timor are preparing for the pull out of UN peacekeepers next year. They're handing over key duties to the country's new military, though there are warnings from East Timor's leaders that the country's fledgling forces are not yet capable of defending their own borders.

Our Correspondent Mark Bowling reports from Dili.

(sound of helicopter)

Mark Bowling: East Timorese troops are busy training in hostile conditions. In this exercise outside Dili, more than 100 heavily armed soldiers run in formation across a saltpan and board helicopters. For most of these young recruits, it's the first time they've been flying.

Military Instructor: Choppers will come in a line - 1, 2, 3, 4.

Mark Bowling: Every move they make is being carefully watched by Australian military instructors.

Eighteen months after independence, East Timor's fledgling army is facing its biggest challenge – the pullout of United Nations peacekeepers, leaving it with the task of defending its own borders. a task which East Timor's own Prime Minister, Mari Alkatiri, says it's not ready to take on.

Mari Alkatiri: No, not yet, for sure. The Defence Force is a very embryonic one still. That is the reason why we are asking for assistance in security.

Mark Bowling: With clear memories of Indonesian-backed militia violence, Foreign Minister Jose Ramos-Horta shares the same concern about East Timor's security.

Jose Ramos Horta: I plead with Australia not to disengage from East Timor too soon, too fast.

Mark Bowling: Australia is yet to commit troops to East Timor after next year's UN pullout, but it is involved in passing on military skills under the terms of a defence cooperation pact.

In charge of that program is Colonel Malcolm McGregor.

Malcolm McGregor: We're taking steps to ensure that we're in the country for another decade at least. We're building long-term infrastructure to keep our people here. Progress is being made very rapidly, but it is a long haul.

Mark Bowling: Meanwhile, Australia's role defending East Timor's borders is winding down. Five hundred troops will be home for Christmas. Most of the remaining 500 soldiers will leave with the United Nations at the end of next May.

As part of the pullout, every piece of equipment brought in by Australian troops must leave the country – a massive logistical operation costing $200-million.

This is Mark Bowling in East Timor for AM.