The new president of Indonesia, B J Habibie, says he is willing to give the disputed territory of East Timor a special status within Indonesia.

In a BBC interview, Mr Habibie also announced that ten East Timorese political prisoners would be released from jail.

But he made it clear they would not include the leader of the separatist uprising, Xanana Gusmao.

Correspondents say it's the first real concession Indonesia has made since it invaded East Timor in 1975.

But they add that it would provide only very limited autonomy, and fall well short of the minimum demands of the Timorese.