Guido Guilliart, Dili – A surge in violence in East Timor's capital left one soldier dead and seven others wounded Tuesday, the government said, as Australia and New Zealand offered to provide troops to help restore calm.

The bloodshed occurred during two gun battles in the hilly outskirts of the capital Tuesday morning between disgruntled ex-army forces and soldiers, East Timor Prime Minister Mari Alkatiri told reporters.

He blamed the violence on a "small group of renegade soldiers" who fled Dili in April after rioting that left five dead and dozens injured.

East Timor has been plagued by unrest since the dismissal earlier this year of nearly 600 soldiers a third of the entire army after they went on strike, complaining of discrimination and poor working conditions.

The ex-soldiers, who threatened to wage guerrilla warfare unless they were reinstated, bunkered down in the hills surrounding the capital, Dili.

Army troops came under fire twice Tuesday morning in the southeast Fatuhai neighborhood, a government statement said.

"They were attacked by members of the renegade force led by Maj. Alfredo Reinado," it said. Unarmed soldiers were first ambushed while picking up pay checks at a bank and in a second incident were attacked at a checkpoint. In response, East Timor's army defense forces and police tried to apprehend the gunmen.

"At this point it is believed that one solider was killed, and five soldiers and one policeman were wounded (one badly injured). One of the renegade soldiers was also badly hurt," it said.

Army Chief of Staff Col. Lere Anan Timor vowed to capture the renegade soldiers "dead or alive."

Australia, which led a UN-military force into East Timor after its bloody push for independence from Indonesia in 1999, said it was readying naval vessels, aircraft and troops to enable a rapid response.

"We've made it clear that we are ready to offer assistance to East Timor if it's needed," Australian Foreign Minister Alexander Downer told lawmakers in Australia's capital, Canberra, adding the military could also help with evacuations if needed.

New Zealand said a platoon of about 30 troops was on standby for deployment to East Timor.

At the heart of the conflict are the former soldiers' claims that they were being discriminated against because they came from the west of the small country, while the military leadership originates from the east.

Police Maj. Domingos da Camara said some of the dismissed soldiers appear to have the support of some breakaway police units, which have joined them in the hills with weapons and ammunition. That claim was later denied by the government.

A government commission was established this month to investigate the ex-soldiers' allegations of discrimination, but has yet to release results.

There have been several violent clashes in recent months, including riots in late April that killed five people and destroyed more than 100 houses and businesses in Dili. East Timor voted for independence from Indonesia in August 1999 after 24 years of brutal occupation that human rights groups say left as many as 200,000 dead.