The Indonesian army and state news agency said an Indonesian policeman was killed by the peackeeping troops. Two other policemen were wounded.

It is the first time the members of the Interfet force have clashed directly with Indonesian soldiers since they arrived last month.

The BBC's Simon Ingram: "The Indonesian army itself was also involved"

A member of the UN-backed force says that his troops were on the eastern side of the poorly marked border, disputing an earlier report in which Indonesian security personnel said the clash took place in West Timor.

On Saturday, peacekeepers exchanged fire near the border with pro-Jakarta militia fighters, shooting at least one militiaman dead.

Border clashes

First clash with Indonesian forces

Major David Kilcullen of the UN force said an Indonesian officer acknowledged his men were inside East Timor when the latest border clash occurred.

"He admitted ... that we were still on our side of the border when his troops opened fire," he said.

Earlier, Colonel Mark Kelly, of the Australian army, said that on Saturday a patrol of about five men from the multinational Interfet force responded when they came under attack from 12 to 15 militiamen.

BBC's Simon Ingram: Clashes suggest militias not a spent force

Several other militiamen were thought to have been injured.

Col Kelly said the incident happened two kilometres inside the border at a village called Alto Lebos, north of the port of Suai.

He said the militiamen had been firing their weapons as they advanced through mountainous terrain, adopting what he described as an aggressive posture.

BBC's Simon Ingram: "Efforts to secure out-lying areas have progressed slowly"

The special forces response unit had returned fire and retrieved the dead man's body before being evacuated by helicopter. Interfet troops suffered no casualties, he said.

The international force's first fatal engagement with the militias came on Monday, when two militiamen were killed and two Australian soldiers wounded.

Troop reinforcements

The latest clashes were confirmed as more Australian troops arrived in East Timor, as part of the continuing deployment in the territory by multinational forces.

One of the few to return so far from West Timor

The latest addition of 250 soldiers - and 40 armoured personnel carriers - brings to 6,500 the strength of the Interfet force. It is still well short of its full intended strength.

The force has been criticised for concentrating too much manpower in the capital, Dili, thereby ignoring the need for troops in rural areas.

On Saturday, General Peter Cosgrove, commander of the Interfet force, offered a hand of friendship towards the pro-Jakarta militias, inviting them to abandon violence for a stake in the country's future.

He said pro- and anti-independence militias who gave up their arms would be invited to join the new East Timorese Government.

Fears for refugees

Bishop Carlos Belo urged international pressure

On Sunday morning, East Timor's spiritual leader, Bishop Carlos Belo, called for more international pressure to secure the return of refugees from West Timor who fled or were forced out amid the violence of the August referendum.

Bishop Belo urged the United States and Europe to put pressure on Indonesia to allow the repatriation.

The United Nations believes 130,000 people are, in effect, being held hostage by pro-Jakarta militias in the west of the island.

Bishop Belo made his comments after delivering his first Sunday mass since returning from exile last week.

"It is bad, they are living far from their country and they are like refugees, like foreigners on that land and they do not have anything and they are threatened by Indonesians, by militia," Bishop Belo said.

Some 160 returned to Dili on Friday and the UN refugee agency has stated its aim to repatriate up to 1,000 refugees per day.