According to the force commander, General Peter Cosgrove, two militiamen were killed, and two Australian troops wounded.

It was the first fatal clash between the two sides since the international troops were deployed in the territory.

Gen Cosgrove said the militia fighters were shot dead when they ambushed a convoy of the International Force for East Timor (Interfet) near the town of Suai, 15km (nine miles) from the border with Indonesian-controlled West Timor.

The Australian troops were not seriously injured, the commander added.

They were evacuated to the East Timorese capital, Dili, and could be taken to Darwin, in northern Australia.

The clash happened at 0525pm local time (0925GMT).

It was seen as the first sign that the militias were actually prepared to take on the heavily-armed troops in the Australian-led force.

BBC South-East Asia correspondent Simon Ingram in Dili: "The militias could still be a force to reckoned with"

BBC South-East Asia correspondent Simon Ingram says the militias are currently regrouping across the border in West Timor and could still prove a force to be reckoned with.

In a briefing in Dili, Gen Cosgove said: "It was well and truly a sneak attack."

"The militia have chosen again to operate with violence, notwithstanding our desire to do this with negotiations," he said.

He warned the militias: "I want to make it plain that Interfet soldiers will not tolerate this."

The BBC's Yvettte Austin: "The two Australian soldiers who were injured are now recovering in Dili Hospital"

The commander repeated the demand to all fighters to decommission their weapons.

"I feel some sadness for the misguided individuals who ambushed Interfet soldiers. They have obviously come off worst, and that will continue to be the case unless they lay down their arms," he said.

Earlier on Wednesday, two militia members were injured in the legs when they tried to speed through an Interfet roadblock, he added.

Belo's return

The incidents came on the day of the return of East Timor's spiritual leader to his devastated homeland.

Bishop Carlos Belo, who spent a month in exile, was given a hero's welcome in the territory's second city, Baucau, as old women, priests and children hugged him and kissed his hand.

Bishop Belo was forced to flee the territory last month after pro-Jakarta militias, backed by the Indonesian military, went on the rampage after the overwhelming referendum vote for independence.

On arrival at Dili airport, he praised the international community for coming to the aid of his people.

"My priority now is to be with the people - to pray with them, to say Mass with them and to be with them," said the bishop.

Bishop Belo: one month in exile

Many refugees are thought to still be hiding in the mountains, despite the presence of a UN peacekeeping force.

"Why do they continue to live in the forest? This is not our life," said Bishop Belo, shortly before boarding his homeward flight from Australia.

"As human beings we must return to our villages, to our towns, to begin to rebuild."

Bishop Belo is seen as a hero by many in East Timor, for his relentless opposition to Jakarta rule in the former Portuguese province.

Despite constant death threats, the Roman Catholic leader led a 24-year long non-violent campaign for independence from his Dili pulpit.