Isolated clashes between youth gangs -- the product of East Timor's desperately poor economy and massive unemployment -- were reported throughout the day, but the city appeared mostly calm.

Gusmao, who on Tuesday assumed emergency powers and sole responsibility for security, went on a tour of the city, urging thousands of displaced residents to return to their homes and promising security would be restored soon.

"The best thing you can do is go back to your homes," he told hundreds of people who swarmed around him as he visited a camp for displaced people near the United Nations headquarters.

"Let us deal with the security. Do not take matters into your own hands."

Rival gangs loosely allied to the armed forces went on a rampage of looting and arson last week after the government ordered feuding soldiers and police out of Dili, leaving the capital of the world's youngest nation without security.

The violence has deepened differences between Gusmao, a hero of East Timor's independence struggle, and Prime Minister Mari Alkatiri, whose sacking of 600 soldiers last month triggered the crisis.

Foreign Minister Jose Ramos-Horta, a winner of the Nobel Peace Prize, says the country has been badly let down by its government.