Rudd later flew to the northern Australia city of Darwin to visit Ramos-Horta, recovering in hospital there from double gunshot wounds.

Rudd shook hands with his East Timor counterpart Xanana Gusmao in Dili, before meeting senior United Nations and Australian military officials there.

"A bullet can wound a president but it never can penetrate the values of democracy," Gusmao told reporters after talks with Rudd amid heavy security in the capital, where international troops and police locked down streets.

"Our nation is a proud nation. We are ready to progress from volatility to stability, and from fear to confidence," Gusmao said.

Rudd, who sent 200 extra troops and police after Monday's double assault by rebel soldiers on Ramos-Horta's home and Gusmao's motorcade, said Australia would stand "shoulder-to-shoulder" with Asia's youngest nation.

"It's by the ballot box, and not by the barrel of a gun, that the decisions for our countries will be made," Rudd said.

Australia has 1,000 troops in East Timor, backing up 1,600 United Nations police.

Gusmao was unharmed in the attacks, but rebel leader Alfredo Reinado was killed in the gunfight at Ramos-Horta's house.

The man who claims to have taken command of rebel soldiers after Reinado's death, former army lieutenant Gastao Salsinha, told Reuters his supporters would fight if attacked by international forces.

East Timor's prosecutor-general has issued a warrant for his arrest.

"I still have several weapons and other army equipment, as well as... many supporters in the country. Alfredo's death will not stop us fighting, because his death is a lesson for us to defend justice," Salsinha told Reuters.

International security forces were sent to the resource-rich but still impoverished country in May 2006 after ethnic fighting and clashes between rival police and the military, which left more than 30 people dead and 150,000 living in refugee camps, from a population of around a million.

"HE'S A FIGHTER"

Rudd later flew to Royal Darwin Hospital, where Ramos-Horta was taken on life-support after he was shot by renegade soldiers led by Reinado.

Australian doctors will carry out more operations over the weekend to repair damage to Ramos-Horta's right lung and remove bullet fragments.

"He's a fighter. I know old Jose, he's a fighter," Rudd said, declining to comment on the president's condition.

East Timor's parliament has imposed a state of emergency following the latest unrest, with Australian special forces soldiers hunting rebels in hills near the capital.

The tiny nation's prosecutor-general issued arrest warrants for 24 people suspected of involvement in the attacks.

In Dili, the streets were calm and shops, offices and banks were open. Fears of violence in the wake of the double assassination attempt have so far proved unfounded.

"I only hope there will be no more unrest and rebellion. Because of the rebellion, the government imposed the state of emergency and we can't do anything at night. We just stay at home. It is not good for us young people," said Adriano da Costa, a shopkeeper in central Dili.

Reinado led a revolt against the government and was charged with murder after the factional violence in 2006. Later that year, he escaped jail with 50 other inmates, embarrassing security forces.

East Timor, which is just beginning to tap considerable oil and natural gas resources, gained full independence from Indonesia in 2002 after a U.N.-sponsored vote in 1999 that was marred by violence.

Indonesian invaded the former Portuguese colony in 1975. Many thousands of East Timorese died during the brutal occupation that followed.