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The discovery came as international peacekeeping troops pushed further into the devastated territory and militia groups stepped up their activities.
The mutilated body of Dutch journalist Sander Thoenes, who worked for the London Financial Times, was found on the outskirts of Dili on Wednesday - apparently murdered by the militias.
Stench of rotting flesh
The armed anti-independence groups are alleged to have carried out atrocities similar to those in the Balkans.
Pro-independence campaigners showed BBC correspondent Ben Brown a site where they said militiamen hanged their victims from a meat hook - still in evidence - and slit their throats before decapitating them and dumping their bodies down a well.
The stench of rotting flesh was testimony to the allegations.
Between 10 and 30 people had been killed in this way, eyewitnesses told him.
![[ image: width=150]](/olmedia/455000/images/_455030_well150.jpg)
Multinational troops have now established a presence in the second city Baucau, but the situation in most of the country is still said to be very dangerous.
Soldiers raided the headquarters of one militia group, confiscating weapons including home-made guns, machetes and knives.
But there are many more weapons on the island in the hands of both pro and anti-independence groups.
The commander of the peacekeeping force, Major-General Peter Cosgrove, said the provincial capital, Dili, was not yet secure.
Eurico Gutteres, commander of one of the most notorious anti-independence militia, was quoted by Indonesia's official news agency as saying East Timor might be plunged into a civil war.
In the Baucau operation, Australian Black Hawk helicopters flew 150 troops into the northern coastal city.
It was the first major advance outside Dili since the UN-backed peacekeepers arrived on Monday.
Baucau has a larger airport than Dili, which will eventually allow the force to speed up its deployment into East Timor.
Anger at refugee return
Maj-Gen Cosgrove said the pro-Jakarta militants may be stepping up their random attacks because refugees, who had been in hiding, are returning to Dili.
He said they wanted to show "all is not yet secure".
People flooded back from the mountains to Dili on Tuesday, after peacekeepers moved into the city.
Thousands of people were displaced and whole towns destroyed when the militias, backed by Indonesian troops, went on the rampage to punish those who voted for independence last month.
Click here to see a map of latest developments in East Timor
Maj-Gen Cosgrove said the situation was particularly dangerous because of the random nature of the attacks.
Two other foreign journalists had a narrow escape when their car was ambushed, forcing them to hide until they could be rescued by Australian troops.
Returning refugees have ransacked government-run warehouses in Dili, carrying away sacks of rice and sugar, and barrels of cooking oil.
Australian peacekeeping forces managed to regain control of the warehouses, but only after most of the food had gone.
The refugees said they could not wait for international aid to arrive.
The international charity, Medecins Sans Frontieres, has criticised the intervention force for not allowing more humanitarian relief into East Timor.
It complained that the peacekeepers gave space on flights for journalists while limiting access for aid agencies.
Aid flights were suspended as the military build-up got under way because of a lack of space at Dili airport and a shortage of aircraft.
Despite the return of some refugees, thousands remain in hiding in forests and mountains.
Airdrops
People sheltering in the mountain town of Dare say about 20 people there have died from malnutrition. They are still too afraid to return to their homes in Dili.
UN spokesman David Wimhurst said food airdrops had been delayed for a second day as military aircraft poured into the airport.
Nearly half of the 7,500-strong peacekeeping force was expected to be on the ground by Wednesday.
The force has so far secured Dili port, the airport and the UN headquarters. Several warships have also arrived.
Indonesian Security Minister Feisal Tanjung said President BJ Habibie will soon lift martial law in East Timor, and hand responsibility for security in the territory over to the multinational force.
An Australian military spokesman said Indonesian soldiers were expected to have withdrawn completely from the territory by Sunday.
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Peacekeepers push into Timor
(22 Sep 99 | Asia-Pacific)
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Cook backs Timor 'war crimes' probe
(22 Sep 99 | UK Politics)
Clash in Jakarta over demonstrations bill
(22 Sep 99 | Asia-Pacific)
Journalist killed in East Timor
(22 Sep 99 | UK)
Timor and the end of empire
(21 Sep 99 | Asia-Pacific)
UK 'water aid' bound for East Timor
(22 Sep 99 | UK)
Indonesia reaction to Timor force
(21 Sep 99 | Monitoring)
Refugees: Images of joy and sadness
(21 Sep 99 | Asia-Pacific)
Habibie on the defensive
(21 Sep 99 | Asia-Pacific)
Timor: The military challenge
(20 Sep 99 | Asia-Pacific)
Picture gallery: Peacekeepers go in
(20 Sep 99 | Asia-Pacific)
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