Australian Foreign Minister Alexander Downer has visited East Timor to appeal for political reconciliation to end two weeks of unrest.
Mr Downer said Indonesia was not involved in the unrest
He urged rival factions to lay down their arms and join negotiations.
He also called on the United Nations to play a bigger role, emphasising the need for a UN-controlled police force,
The UN scaled back operations after East Timor became an independent nation in 2002 following a 1999 referendum.
Australia supplies most of the 2,500 peacekeepers in East Timor. They are trying to quell unrest sparked by the sacking in March of 600 soldiers who had gone on strike.
Two weeks of violence between rebel troops and ethnic gangs has left about 20 people dead.
Mr Downer held talks with East Timor's Prime Minister Mari Alkatiri and Defence Minister Jose Ramos Horta in a half-day visit to the capital, Dili.
He said he would talk to UN member countries about establishing an international police force.
"I think it would be appropriate for that international police presence - which would, no doubt, include quite a few Australians - to operate under the auspices of the United Nations," he said.
The 1999 referendum ended decades of rule by Indonesia, but despite a huge international effort to rebuild East Timor it remains Asia's poorest country.
Timorese troops have alleged discrimination against those from the west of the country, close to the Indonesian border.
But Mr Downer was quick to rule out any Indonesian involvement in the unrest.
"We have no evidence at all that any of the violence here in recent times has been co-ordinated by anybody in Indonesia, or that there has been any Indonesian involvement in it," Mr Downer said.
Mr Alkatiri, who ordered the troop sackings, had said some of the unrest was caused by ex-members of pro-Indonesian militias.
Those militias had reacted violently to East Timor's independence vote in 1999.
Violence in Dili has eased recently but the UN has warned that camps set up to accommodate about 100,000 people who fled the unrest could become a new flashpoint.
Gregory Garras, head of the UN refugee agency's emergency team in East Timor, said: "People are living in a desperate situation, cheek to jowl. There's no privacy, it's hot, there's insufficient water. The conditions are absolutely untenable."
Mr Alkatiri said he expected international peacekeepers to stay for several months.
However, former colonial power Portugal and leading troop supplier Australia are still to agree a command structure.
Portugal has refused to allow its contingent to come under control of the Australian-led force.
Portuguese Foreign Minister Diogo Freitas do Amaral said its troops would never accept being "subordinate to the operational command of a foreigner" apart from the UN.