Soldiers who have threatened to overturn the government of East Timor were today preparing to hand in their weapons, according to their commander and Australian peacekeepers.

Lieutenant Commander Alfredo Reinado, a military police officer, led nearly 600 soldiers out of their barracks in March, protesting at perceived discrimination against West Timorese by the government of Prime Minister Mari Alkatiri and President Xanana Gusmao.

In late May, the rebels approached Dili, the capital of the world's newest country, and demanded the resignation of Mr Alkatiri, sparking widespread panic, looting and arson and a breakdown of order that compelled the Australian Government to send in 1,300 soldiers. At least 2,000 foreign troops now patrol the city.

But today, Commander Reinado said that his force was willing to hand over its guns if ordered to by President Gusmao, widely considered the hero of East Timorese independence. Asked if he was preparing to surrender, he told the Associated Press: "Maybe. I’m still awaiting a written order from the President."

Asked if he would obey the order if it came, he said: "Yes I will."

It was unclear whether the soldiers would still insist on the resignation of the much-criticised Mr Alkatiri, but news of the possible armistice came after Commander Reinado hinted last week that his troops would prefer a peaceful solution to continued guerilla warfare.

The commander of the Australian peacekeepers, Army Brigadier Mick Slater, said the handover of weapons could begin as early as today.

"We are in the process now of making arrangements for them to hand in their weapons, and there is every indication that they’re going to comply," he said.

"I’m confident that we’ll start getting some of those guns, if not today, maybe tomorrow."

Brigadier Slater said the rebels had been "exceptionally cooperative" and had allowed a small group of Australian soldiers to be posted by the colonial-era villa in Dili that serves as Commander Reinado's headquarters.

"We need to make sure they feel safe and secure enough to hand in their weapons," he said.

The violence in East Timor, the most serious crisis since the country elected its first government in 2002, has killed at least 30 people.

More than 100,000 people are believed to have abandoned their homes. The exodus recalls the enormous upheavals of 1999, when the Indonesian Government gave up the territory after more than 30 years of brutal rule, and half of East Timor's population fled into the streets.

The large displacement of people has caused a huge strain for humanitarian groups in Dili, who are struggling to provide food and shelter for thousands of people during days of tropical rain.

Nigel Spence, the chief executive of Child Fund Australia, said today that as the security situation comes under control, families must be encouraged to return home.

"It’s generally portrayed as a law-and-order problem which obscures the fact that it’s a serious humanitarian crisis and the kids in particular are at risk," said Mr Spence.

"There’s a lot of distrust and fear at the neighborhood level and it could be weeks or even months before families are confident enough to go back to their villages," he added.

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