East Timor's Prime Minister Mari Alkatiri talks on phone during a press conference at Fretilin party headquarters in Dili, the capital of East Timor, Sunday, June 25, 2006

East Timor's ruling party has voted to keep the embattled prime minister in office, defying calls for his resignation from the president and thousands of protesters.

Members of East Timor's ruling Fretilin Party agreed Sunday to keep Prime Minister Mari Alkatiri in office, despite mounting pressure for his resignation.

Stanislau Da Silva is agriculture minister and a senior member of the central committee of the Fretilin Party.

"…We call on the president to re-open the dialogue… because we believe only through dialogue we can… find the best solution," Da Silva  says. "We don't believe that the resignation of the prime minister will, in the short term, resolve the unrest in Dili…. So… we appeal on the prime minister and the president to…  not resign from their present position."

Last week, the country's popular president, Xanana Gusmao, issued an ultimatum threatening to resign, if Mr. Alkatiri remained in power.

Thousands of demonstrators loyal to the president called for him to reconsider. Mr. Gusmao agreed to remain, after the United Nations appealed for him to follow through with his constitutional duties.

Mr. Alkatiri has been blamed for mishandling a military mutiny that flared into two months of general violence. The unrest paralyzed the capital, killed 21 people and displaced thousands more, causing a humanitarian crisis. Mr. Alkatiri has also been accused of arming militia groups and ordering them to assassinate his opponents, allegations he denies.

The recent violence was the worst since the country voted for independence from Indonesia in 1999, though an international peacekeeping force of nearly three-thousand troops has largely restored order.

Critics also accuse Mr. Alkatiri's government of failing to use the country's revenues from oil and gas exploration rights in the Timor Sea to build a viable economy and create jobs.

Ian Wilson with the Asia Research Center at Murdoch University in Western Australia says the economic situation may be as much to blame for the recent violence as political concerns.

"There have been suggestions that some of these different gangs have had political backing, but there has been no evidence to support this yet," Wilson says. "I think it's more likely that, when you have a country, such as East Timor, where there are such high levels of unemployment and a lot of dissatisfaction among young people, that a lot of these gangs have just taken the opportunity for more petty revenge or looting…."

Unemployment in the tiny nation of one-million is estimated around 70 percent.

Also on Sunday two ministers resigned, including Nobel peace prize winner Jose Ramos-Horta, who held both the foreign and defense portfolios.

A spokesperson for the president said Ramos-Horta had resigned in protest, saying he felt the country was not working properly.

The transport (and communications) minister also resigned over the decision to retain Mr. Alkatiri.