More than 1,000 students had occupied the provincial parliament to demonstrate against the reported killings. They agreed to leave after regional leaders promised an independent investigation, student leaders said.

Indonesian troops are alleged to have killed about 40 people during an operation against independence guerrillas in remote mountains in the district of Alas, south of the provincial capital, Dili last week.

BBC's Jonathan Head: Students have ended their protest

However, the International Committee of the Red Cross has said its investigation found no evidence of any massacre.

ICRC spokesman Tony Pfanner said two Red Cross teams which had visited the scene found "no confirmation of large-scale atrocities". He said the teams had met no restrictions during the investigation.

He added that the situation in Alas was "less tense than it had been last Thursday".

The Timorese resistance has accused the Red Cross of not being neutral regarding events in Alas, Portuguese radio reported.

Indonesia has denied claims of a massacre and criticised Portugal's decision to suspend UN-sponsored talks over the future of the troubled territory.

BBC Correspondent Jonathan Head said an independent inquiry into the alleged killings could be the start of the building of some trust between the Indonesian authorities and their opponents.

The students are also demanding the withdrawal of Indonesian troops from the territory.

Concern at violence

In Washington, the US State Department expressed concern at what it termed the credible reports of civilian deaths.

"We are disturbed at the reports of new violence in East Timor. We call on all sides to refrain from violence and take all measures that are necessary," said Spokesman James Rubin.

Bishop Belo gives his support

East Timor's spiritual leader, Roman Catholic Bishop Carlos Belo, said he had heard that 30-40 people had been killed.

The Nobel Peace Prize winner joined the students in calling for the soldiers to withdraw.

A former East Timor governor, Mario Carascalao, was quoted by Portuguese news agency Lusa as saying on Sunday that 44 people had been killed and 40 others injured.

The killings are alleged to have taken place during a raid aimed at the Fretilin separatist movement in reprisal for an attack on the military headquarters in Alas earlier this month, in which three Indonesian soldiers were killed.