The European Union has lifted an arms embargo on Indonesia, imposed in September last year as violence raged in East Timor following the territory's vote for independence.

However, European arms exports should meet EU standards, an EU statement said.

The EU code of conduct sets eight criteria which countries must take account of when deciding whether to approve arms exports.

It includes refusal to issue an export licence if there is a "clear risk" the equipment will be used for internal repression.

Noting the historic changes in Indonesia in recent months Portugal, as the current EU president, said it was no longer necessary to impose the "restrictive measures ordered against the previous government of Indonesia".

However, the statement said, any arms exports from EU countries "must conform strictly to the EU code of conduct."

To ensure this, the EU would continue to monitor closely events in Indonesia, it added.

"The European Union is deeply concerned at the appalling violence in the Moluccas, the tensions in Irian Jaya and the persisting conflict in Aceh," said the statement.

"The EU underlines the need to ensure accountability for past human rights abuses, particularly in East Timor," it said, "and the need to meet international concern about the fate of the tens of thousands of refugees who remain in West Timor."

UK Foreign Office Minister of State Peter Hain said that any application to export military equipment to Indonesia would now be considered on "a case-by-case basis".

Mr Hain said: "The UK, together with our EU partners, continues to monitor closely the performance of the new Indonesian administration and in particular the actions of the Indonesian military."

Abuse fears

The EU announcement came as Indonesian President Abdurrahman Wahid warned the military he would take "harsh action" against any challenge to his power amid rumours of an impending coup.

President Wahid has come under attack for failing to end religious and ethnic violence sweeping the predominantly Muslim country.

The human rights group Amnesty International said lifting the ban would risk condemning more people to human rights abuses at the hands of a security force equipped with weapons manufactured in Europe.

"While East Timor is now secure, similar patterns of intimidation and killing which shocked the world and prompted the EU to impose military sanctions on Indonesia are being repeated in other parts of the country, " said AI UK's arms exports campaigner, Beverley Duckworth.

At least one EU member state had spoken out in favour of keeping the ban in place.

Dutch Foreign Affairs Minister Jozias van Aartsen said on Sunday he wanted to maintain the arms embargo, adding it would not be sensible to lift it at the moment.

Speaking on national radio, Mr van Aartsen urged Dutch defence electronics firm Hollandse Signaalapparaten to abstain from supplying radar equipment to Indonesia.

British Foreign Office Minister John Battle said last week that existing arms export licences which were put on hold in September could be resumed on 17 January.