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Fears are growing that members of the militia will attack troops from the Australian-led peacekeeping force.
Thick plumes of toxic black smoke rose over Dili as some of the last Indonesian soldiers relinquished control in a humiliating withdrawal, setting fire to a pile of tyres inside a recently-abandoned barracks.
The number of Indonesian soldiers in East Timor is expected to fall from about 15,000 troops to around 1,500 by Monday or Tuesday.
The last two battalions will remain in a liaison role.
Attacks feared
A BBC correspondent in Dili says thousands of militiamen have been assembling in surrounding towns - apparently preparing to attack the peacekeepers.
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Western journalists were being taken by armed escort to the Tourismo Hotel near Dili harbour as a safety measure.
The hotel has been under heavy guard by Interfet troops, who are stationed in pill boxes around the building and at nearby vantage points.
Journalists inside the hotel were asked to turn off all lights because they were illuminating the soldiers' positions.
The Interfet commander, General Peter Cosgrove, has called on the militias to lay down their arms and take part in the political debate on the future of East Timor.
Interfet peacekeepers are reportedly frustrated by their rules of engagement which instruct them to hand over detained militia to Indonesian police, who they say put them straight back onto the streets.
New aid route
On Sunday, Unicef managed to deliver emergency supplies by road from West Timor to East Timor for the first time.
An overland supply route would ease congestion at Dili airport which has a limited capacity to handle heavy traffic.
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A Unicef airlift from Darwin in northern Australia to Dili on Saturday carried 60 health and drug kits, 5,000 blankets, 3,000 jerry cans and 12.5 tonnes of baby food.
"We have been told that 1.2 tonnes of baby food has been delivered to hungry young children in mountain camps in Dare and elsewhere," said Jeff Brown, a Unicef spokesman.
From a population of 800,000, there are an estimated 400,000 to 500,000 displaced people within East Timor and more than 150,000 refugees in West Timor.
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On Saturday, Interfet soldiers escorted an aid convoy to East Timor's second city, Baucau.
They found that the city had escaped the worst of the destruction. More than 1,000 residents had packed inside a church to hear the local bishop celebrate mass.
The aid team, escorted by armoured personnel carriers and helicopters, was assessing how to get food to the hundreds of thousands of refugees who have fled their homes to escape the recent fighting.
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"We have not found any camps with 50,000 people in them, so the situation has lots of pluses but some very sinister minuses," he said.
The UN's World Food Programme has been making air drops of emergency rations over the dry coastal mountains where East Timorese are believed to be hiding.
UN human rights
The UN Human Rights Commission reconvenes on Monday to discuss a European Union proposal for an investigation into human rights violations in East Timor.
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The plan was opposed by 11 Asian nations in the 53-member commission who argued that Indonesia had already shown its good faith by allowing a UN multinational force into the territory.
A compromise deal, to be discussed on Monday, would allow the inclusion of Asian experts on the investigation team.
On Sunday, UN officials said the bodies of two East Timorese murdered during the militia rampage were exhumed from graves on the outskirts of Dili.
A torture device was also found in an abandoned Indonesian barracks.
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