Cheering crowds greeted Mr Gusmao as he arrived at the office of the governor amid tight security provided by the international peacekeeping force, Interfet.

"Today is the day of freedom of East Timor," he told a 5,000-strong group of supporters.

"All of our suffering, we can leave behind. Today we see our future. This land is ours. We will be independent forever."

He said East Timor must now show the world that it can move forward and develop its own future.

The East Timorese leader, who flew secretly to the territory on Thursday night, wept during his speech, his voice breaking with emotion.

Sobs could also be heard from the crowd, while others punched the air with cries of "Viva East Timor."

Vincente da Cruz, a local man wearing a T-shirt bearing Mr Gusmao's face, said: "This is the day we have waited for. Now he is back we can start again. Now we can be happy again."

Mr Gusmao, who is regarded by many East Timorese as a legendary and charismatic figure, is a likely president of the new country.

Separatist campaigner Jose Ramos Horta: Those responsible for bloodshed must be brought to justice

Meanwhile, independence campaigner, Jose Ramos Horta, has called for reconciliation with the new democratically elected government of Indonesia -- but he warned that the country's military must not go unpunished for alleged crimes committed in East Timor.

Mr Ramos Horta - who won the Nobel Peace Prize in 1996 - told the BBC that the new government's decision to recognise the East Timorese independence vote was greatly encouraging.

Interfet into enclave

The BBC's David Willis: "Supporters wept and cheered as he spoke"

Mr Gusmao arrived just two days after the Indonesian parliament endorsed the results of East Timor's independence referendum, paving the way for the territory to become the world's newest nation.

Interfet commander Major-General Peter Cosgrove met Mr Gusmao briefly, and described his return as a "joyous day for East Timorese".

"We hope that with his wise and mature leadership, together with the other leaders of East Timorese society, that they can help the UN manage the transition to nationhood."

Mr Gusmao's return came as the multinational peacekeepers announced that they had expanded their security force to cover the whole of the territory.

The BBC's Jim Fish: "He's the symbol of East Timor's struggle"

Interfet said it had moved into the enclave of Oecussi in the western half of Timor island, for the first time, and had disarmed 40 militias.

The action follows allegations by pro-independence groups that murders and rapes were taking place in the enclave on a daily basis. The groups had called for Interfet to intervene quickly.

Dili residents wept as they listened to Mr Gusmao

Mr Gusmao's homecoming also coincided with the arrival of hundreds of refugees on board a ship from West Timor.

Most of the ship's passengers had been in West Timor since early September, having either fled the violence in East Timor or been forced across the border by pro-Indonesian militia.

It was the first such ship to carry home refugees displaced by the recent violence. Tens of thousands of East Timorese are still waiting across the border hoping to return soon.