Ahmad Pathoni, Dili – Delvina da Costa complained of squalid conditions and a shortage of food in the refugee camp where she has lived for almost two years, but the prospect of returning to her old neighbourhood in Dili fills her with dread.

Her house in East Timor was burned down in 2006 during a wave of violence that killed 37 people and forced 150,000 from their homes, prompting the dispatch of international troops and United Nations police to restore order in the young impoverished nation of 1 million people.

"We feel it's not safe. There's no guarantee we will be protected from attacks," da Costa, 26, said, holding her naked one-year-old son in a refugee camp near Dili's largest hotel.

East Timor's government and the United Nations have started a programme to relocate some 30,000 refugees living in camps that dot the capital. Starting this month, food rations for the displaced have been reduced by half in an effort to prevent refugees from becoming too reliant on handouts.

Under the $15 million (7.7 million pound) programme, the government will give $4,500 to each family whose home was destroyed as well as a two-month food ration and transport stipend, said Jacinto Gomes, state secretary for social affairs.

Those whose homes were damaged but which can still be repaired will get $3,000 and houses will be built in suburbs for people unable to return to their former dwellings for security reasons.

Gomes admitted that solving the refugee problems is not an easy task. "They have legitimate security concerns but the sooner they can be relocated the better," Gomes told Reuters, adding that he hoped the programme could be completed this year.

Ethnic violence

Allison Cooper, a spokeswoman for the United Nations mission in East Timor, said that in addition to genuine fear, confusion over land ownership was also making it difficult for the refugees to return home. "It's very difficult for people who have become dislocated to actually establish legally that they have land," she said.

The violence two years ago was triggered by the dismissal of 600 soldiers who complained that they had been discriminated against because they were from the western part of the country. The soldiers' sacking by the previous government prompted protests that degenerated into ethnic violence and fighting between factions in the security forces.

Ethnic divisions and conflict in the security forces are in the spotlight again following last week's attack on President Jose Ramos-Horta by army renegade Alfredo Reinado and some of the sacked soldiers who joined his revolt against the government. Ramos-Horta was shot and seriously wounded in the February 11 attack on his house. Reinado was killed while leading the attack.

Prime Minister Xanana Gusmao escaped a separate attack on his convoy the same day which was believed to have been carried out by Reinado's followers.

Reinado became a powerful symbol of East Timor's east-west divide after he deserted to join the sacked soldiers and launched an armed revolt against the government. Many in the west of the country saw him as a hero defending their rights and some politicians in the governing coalition also supported him.

He escaped from jail in Dili in August 2006 and evaded a military operation by Australian troops to capture him in his jungle hideout, where he enjoyed protection from local people.

Crisis situation

The conflict in the predominantly Catholic nation is more complex than a divide between the east and west of the country, said Sophia Cason, an East Timor analyst for the International Crisis Group thinktank.

"Within the east there are so many divisions between groups there. It's not like a cohesive east and a cohesive west," she said. She stressed the need for reform in security forces and for accountability for past crimes, saying that nobody had gone to jail for murders committed in 2006.

"None of these has been dealt with effectively, so hopefully the recent incidents will renew focus on those issues," she said, adding that the government should also address poverty, improve education and create investment opportunities.

Refugees in the Dili camp, who are from the east, said the death of Reinado did not mean the threat against them was over. "He may be dead but there are still others. As long as they are still around, we won't sleep well," said one man, who gave his name as Mariano. His friends nodded in agreement.

Jose Luis de Oliveira, director of East Timor's leading human rights group Yayasan HAK, alleged that some opposition politicians were trying to sabotage efforts to resolve the refugee problems to maintain a situation of crisis even after the death of Reinado in the attack on the president's home last week.

"People say once the Alfredo (Reinado) question is resolved, the refugee problem will be over, but as long as these politicians have not achieved their goals, they will continue to perpetuate the problem," he said, noting that flags of the opposition party, Fretilin, can be seen in most camps.

People in the districts who have to eke out a living have started to become jealous of refugees receiving food handouts and this could create new tensions, he said.

East Timor, a former Portuguese colony, opted to break away from 23 years of Indonesian rule in a violence-marred vote organised by the United Nations in 1999. It became fully independent in 2002 after a period of UN administration but remains one of the world's poorest nations.

[Editing by Sara Webb and Megan Goldin.]