By Tim Johnston
BBC correspondent in Jakarta
East Timor has sacked more than a third of its army after soldiers went absent without leave to protest against poor conditions and rules of promotion.
Many of the disaffected troops are thought to be former insurgents
The soldiers said they wanted an end to "nepotism and injustice" in the force.
They refused to end the month-long stand-off despite an offer by President Xanana Gusmao of a government inquiry.
The dismissal of nearly 600 soldiers is a serious blow to the 1,400-strong force, set up after East Timor gained independence from Indonesia in 1999.
Most of the servicemen involved in the protest were said to be former insurgents whose 25-year fight for independence from Indonesia finally came to an end with the 1999 UN-organised referendum.
The soldiers have had trouble adapting to peace-time conditions and many feel they have not been given the recognition they deserve for their past sacrifices.
East Timor is the world's newest independent states, but with only one million people it is also one of the smallest. Independence from Indonesia has not protected it from poverty and social problems.
A recent UN report said that although East Timor had made some impressive gains over the past four years, it also had deeply entrenched problems.
It is the poorest country in the region with some 40% of the population living in poverty, and after years of under-development there is an acute shortage of skilled people.
An influx of foreign advisers and expatriate Timorese who are occupying crucial jobs has bred resentment among many people who were expecting more tangible rewards for the hardships they endured before independence.