The Federal Government will send an infantry company of 120 soldiers from Darwin to East Timor immediately to reinforce Australian soldiers policing the country.
Prime Minister John Howard told Parliament today that Australia would continue to support East Timor, but that the country must start to take responsibility for its own affairs.
Security in the country has again been under a cloud following the escape from prison last week of rebel leader Alfredo Reinado along with 56 others.
There are about 930 Australian Defence Force (ADF) personnel in East Timor and about 180 members of the Australian Federal Police (AFP).
Mr Howard said that over the next week about 130 ADF logistics, medical and support personnel would be withdrawn with their role being taken over by commercial contractors.
"In recent weeks the level of violence has fallen in Dili thanks largely to excellent work by the Defence Force and the AFP and other international forces," Mr Howard said.
"But there is no doubt the escape of dissident FDTL officer Reinado and 56 other hardened criminals has escalated tensions."
Mr Howard said Reinado's escape was not the fault of Australian soldiers, as claimed by some in East Timor.
"The escape of Reinado was not the fault of the Australian military, the escape of Reinado was due to the negligence of others," Mr Howard said.
"It is for the people of East Timor, having fought so hard for independence ,to take responsibility not just for prison security but to resolve the broader issues that face that country."