The army confirmation follows a report by United Nations officials on Friday who said that they feared 20 villagers had been massacred by pro-Indonesia militias after mobs killed three U.N. workers. Indonesian officials said they had no details of the U.N. report.
The international organization removed all of its staff from East Timor on Thursday after deaths of its workers.
U.N. officials say that over the past two days nearly 240 U.N. staff members and their dependents either left for East Timor overland or had flown to the resort island of Bali.
Indonesia's military blames the murders on a local dispute, but there have been fears they are part of a darker strategy to damage an already weak President Abdurrahman Wahid.
Wednesday's killings overshadowed the start of the U.N. summit in New York, where a minute's silence was observed for the victims.
Wednesday's attack - said to be the worst ever against civilian U.N. staff - shocked world leaders, including Wahid, who was attending the U.N. Millennium Summit.
"This was done at a time when I am in New York, at the United Nations, in order to embarrass me," the official Antara news agency quoted Wahid as saying.
The three men, who were from Puerto Rico, Croatia and Ethiopia, were hacked to death by machete-wielding militiamen who attacked their office, easily barging past an Indonesian police guard.
The United Nations High Commissioner for Refugees (UNHCR) staffers were working in refugee camps in the border town of Atambua where militias forced tens of thousands of East Timorese to flee last year after they voted to end Jakarta's rule.
Indonesian Politics and Security Minister Susilo Bambang Yudhoyono told reporters: "We are investigating...whether it was triggered by the death (of a militiaman) or caused by political motives to discredit the government."
Authorities said they have arrested 15 people in connection with the murders of the three workers and were hunting more suspects.
Wahid told reporters in New York on Thursday: "I have ordered battalions to the place and now a team is investigating the 15 people who ransacked the United Nations High Commissioner for Refugees."
Asked whether he had asked President Clinton for help, Wahid said: "No, because we can take care of them ourselves. If we cannot take care of the problem, then we'll seek help."
But the Indonesian military, strongly linked to the violence that has plagued both West and East Timor over the past year, offered little hope that the pro-Jakarta gangs involved would be brought under control soon.
"There are thousands of them, we have to be careful," said military spokesman Air Vice-Marshal Graito Usdo.
A sergeant in Atambua, about 1,200 miles (2,000 km) east of Jakarta, said there were no plans to raid a nearby militia camp. "It's too dangerous," he said.
The killings are the latest in a campaign of violence that could be aimed at destabilizing Wahid's shaky rule and underline Jakarta's lack of control over its troops who have been tied to atrocities in several parts of the country over the past three years of massive social unrest.
The head of the UNHCR field office in Atambua, Alias Bin, said the police guarding the office made no serious attempt to stop the attackers, some of whom were armed with modern rifles.
"The bodies were mutilated. One was shot, one was beheaded, one was disemboweled. The bodies were dragged out in front of the office," Bin told Reuters Television in the East Timor capital of Dili to which he had been evacuated.
Bin said he and other UNHCR staff fled over a wall at the back of their office when the militiamen attacked, and found refuge in nearby homes. He hid for more than three hours before dressing as a local and riding on the back of a motorcycle to inform the local military.
The deaths came just a week after the United Nations resumed aid work in West Timor, having suspended operations there before because of brutal attacks on its staff.
Diplomats said there had been warning to aid workers not to return to the area without proper protection, despite pledges by the Indonesian security forces that they would be kept safe.
"You have to wonder what's going on here," said a Jakarta-based Western diplomat. "It could be directed at Wahid, or it could be TNI (the military) flexing its muscles."
The commander of the military region covering West Timor, Maj. Gen. Kiki Syahnakri, said the killings were triggered by a dispute between locals and East Timorese.
The http://www.satunet.com Indonesian language news Web site quoted him as saying the U.N. workers were caught up in rioting by militiamen angry at the murder of one of their leaders by locals.
Some diplomats and U.N. officials have questioned Syahnakri's commitment to carrying out Jakarta's orders to rein in the militias. He was in charge of East Timor when the militias razed the territory last September.
More than 120,000 East Timorese remain in refugee camps in Indonesian West Timor, despite international demands that Jakarta close the camps, which also serve as safe havens for the militias.
The refugees were among 300,000 people the militias herded across the border when they razed East Timor after it voted overwhelmingly in August 1999 to end Indonesian rule.
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