Arriving to observe the ballot, Jamsheed Marker said he felt "very positive". He said a joint disarmament pledge by the rival armed camps was "very encouraging".

Mr Marker said he had also received security "assurances" from Indonesian Foreign Minister, Ali Alatas.

Peace deal

The BBC's Jonathan Head in Dili: "The UN believes it still has good reasons for optimism"

Commanders from the pro-independence rebel movement Falantil and leaders of militias opposed to cutting ties with Indonesia met on Sunday at the UN's headquarters in Dili to announce their accord.

At a press conference attended by Indonesian police and military, they pledged to keep their forces in designated areas and to accept the results of the ballot.

Eurico Guterres, commander of one of the pro-Indonesian militias, Aitarak, described the agreement as historic, while Falantil leader, Falur Rate Laek, said it paved the way for a peaceful vote.

"We wanted this agreement so that the people in the mountains can come down and vote tomorrow," he said.

A BBC correspondent in Dili says the UN is determined to ensure the vote goes ahead. But he says there are uncertainties about the sincerity of the factions and whether the leaders can control their forces.

Violence

The BBC's Jonathan Head reports: "Both sides promised to keep their armed men in designated areas during the vote"

The run-up to the referendum has been marred by serious violence, most of it blamed on the pro-Jakarta militias, and has brought world condemnation on Indonesia.

Ten houses were reported burned, and a number of people injured, in a militia attack in the western Oecussi enclave overnight.

At least 12 people have died in the last week, and hundreds have been killed during campaigning for the referendum.

Pro-Jakarta militias have roamed unchecked through the territory, threatening to kill those who vote for independence. Many people have fled them in terror.

Churches across East Timor heard Bishop Belo's message

Concern has been raised that the violence would prevent many of East Timor's 450,000 population from voting in the referendum which will offer wide-ranging autonomy within Indonesia, or independence.

The head of the Roman Catholic Church in East Timor called on Sunday for voters to turn out despite intimidation they might face.

"Vote according your conscience. At this time I ask all of you not to be afraid ... Don't be afraid, be brave and choose the future of East Timor," the Nobel prize winning Bishop of Dili, Carlos Felipe Ximenes Belo, said.