In the first reported violence since the April 28-29 clashes in Dili, police fired warning shots and tear gas to disperse "some hundreds" of youths who surrounded a regional official and police officers in a government building in Gleno, 40 kilometers south of the capital, the prime minister's office said in a statement.

Three policemen were injured, two seriously with stab wounds, and the demonstrators stoned official buildings and damaged at least one police vehicle.

The statement said the demonstrators were demanding the closure of government offices in Gleno.

It described the confrontation as "the exception to the climate of a return to normality" in the country.

Meanwhile in Dili, largely deserted by its fearful population over the past week, Minister of Development Abel Ximenes tendered his resignation.

Ximenes told Lusa he was stepping down because he had "no conditions to continue in government, to promote investments in East Timor", given the current climate of uncertainty.

"Only a crazy investor would invest money in East Timor now", Ximenes, a member of the ruling FRETILIN party's Central Committee, said.

He said he would participate in the party's upcoming congress, slated for May 17-19, in hopes of making the party "more open and ready for the challenges of the 21st century".

Rumors that the recent violence, stemming from a long-simmering crisis in the army, could force President Xanana Gusmão to dismiss Prime Minister Mari Alkatiri led the prime minister's office to issue a communique Saturday.

Alkatiri remains "in office, carrying out in full his duties as head of government", said the statement sent to Lusa.

Pressure for Alkatiri to step down mounted at the weekend when three army majors in active service, accompanied by some soldiers, joined dissident troops who were sacked from the armed forces two months ago.

One of the officers, Maj. Alfredo Reinado, told Lusa Saturday in the mountain town of Aileu, south of Dili, that he held Alkatiri responsible for the army's opening fire on demonstrators in Dili April 29.

"Someone has to be held responsible for this. Mr. Mari (Alkatiri) must take responsibility for what happened", Maj. Reinado said, adding that he was armed and ready to "protect the people".

On Saturday, President Gusmão met with East Timor's two Roman Catholic bishops, urging the church to use its "extremely important" influence to help calm the situation and encourage Dili's panic- stricken population to return to their homes.

More than 70% of the city's 120,000 people sought refuge outside the capital during the past week, according to UN officials.

The flight from Dili began in tandem with peaceful demonstrations two weeks ago by some 600 soldiers over their sacking from the 1,600-strong army over earlier protests against alleged regional discrimination in the military.

The protests erupted into violence outside the government's headquarters April 28 in clashes with police and rioting.

According to the government, five people were killed and nearly 80 injured, including four police officers.

Arsonists burned down or damaged more than 150 houses and shops in the capital during the two days of violence by the official count.