Sydney – East Timor is in danger of becoming a failed state without outside aid, the fledgling nation's President Xanana Gusmao said on a visit to Australia Thursday.

Gusmao told a function in Sydney that East Timor was struggling three years after its independence from Indonesia and needed Australia to continue providing aid and administrative support.

"We are three years old and we still need assistance not to become a failed state," he said. "As the poorest country in Southeast Asia we still need your help."

Gusmao also said his tiny nation wanted to be a good neighbour to Australia. "A neighbour that can help contribute to regional peace and to world peace as well in a very democratic, consistent way," he said.

His comments come as Australia and East Timor officials finalise negotiations on splitting billions of dollars in revenue from oil and gas reserves that lie under the disputed Timor Sea.

Under the deal, East Timor will receive a larger share of revenues from the Greater Sunrise oil and gas field in return for dropping its Timor Sea maritime boundary dispute with Australia for 50 years.

The Australian newspaper reported that East Timor would receive 13 billion dollars (9.75 billion US) under the deal, five billion dollars more than it had previously stood to gain.

Australian Foreign Minister Alexander Downer refused to reveal the terms of the deal, which East Timor Foreign Minister Jose Ramos Horta expects to be signed in August.

"I'm not going to get into particular figures," Downer told reporters. "They (the East Timorese) will do very well out of it."

Gusmao has previously described the resource revenue as his country's only chance to escape a poverty trap that has left it reliant on overseas aid.

The government of affluent Australia had come under intense pressure from religious groups, war veterans and rights activists pressing Canberra to give its impovershed neighbour a fair deal.