East Timor's fugitive rebel leader Alfredo Reinado has refused to attend a scheduled court hearing on Thursday to face murder and other charges related to a deadly outbreak of violence in 2006.

Reinado's lawyer Benevides Barros said the rebel leader would not submit to the judicial process until the government met several demands.

Reinado escaped from jail in the capital, Dili, in August 2006 and has been on the run ever since.

He had led rebel soldiers after the former government sacked more than a third of the country's defence force earlier that year, sparking unrest that left 37 people dead and drove 100,000 from their homes.

Barros said Reinado wanted to continue dialogue with the government to discuss issues of military discrimination and political issues that caused the 2006 crisis.

But Reinado would only participate in discussions if they took place in a military encampment set up in a location of his choice, with security provided by a neutral third party.

Reinado is also asking for a letter from the government recognising that he and his followers are still in the military. He also wants his case heard by a military court, and refuses to allow foreign judges or foreign prosecutors to participate.

"He said he doesn't think the civil court will understand the military things," Barros said. "The other issues he raised is because he doesn't trust the civil judges and prosecutor – he knows the court will put him in jail without a fair trial."

The court issued an arrest warrant for Reinado following his escape from prison, but last year President Jose Ramos Horta called off the warrant following a bungled attempt by the Australian military to arrest the rebel in Same, 50km south of Dili. Five of Reinado's followers died in the mountain raid.

The judge presiding over Reinado's case later accused the president of violating the constitutional separation of powers by waiving the arrest warrant, saying the action was illegal.

Last week, Commander of the Australian troops in East Timor Brigadier John Hutcheson said he would follow the orders of the state and the president, and would not execute the arrest warrant.

"The government is doing a very good job in dealing with Major Alfredo Reinado. He is not, in my mind, a security threat and it is a political issue to be resolved," Hutcheson said.

Ramos Horta recently set May this year as a deadline to resolve issues with Reinado. He said the deadline was not definitive.