Rebel soldiers in East Timor have turned in a handful of weapons to international peacekeepers, raising hopes for an end to months of violence. The move comes amid continuing political tensions as the tiny nation searches for new leadership.

The handful of rebel soldiers had been holed up in the mountains south of East Timor's capital, Dili, since March. They were among 600 soldiers fired from the young country's armed forces, an action that sparked widespread violence, the resignation of the prime minister and international intervention.

On Wednesday, they surrendered automatic rifles and other firearms to Australian peacekeeping troops on a football field in the mountains.

Luiz Veira, the chief of mission in East Timor for the International Organization for Migration, says recent violence has created widespread distrust and unresolved conflict that may take years to address. But he adds that as weapons are taken off the streets, the country inches closer to peace.

"Because the weapons are out of circulation, obviously, but also because of the message it sends, you know it sends a message of renewed hope and confidence," he said. "Whether we're out of hot water or not depends I think largely on the response and the ability of the government and the international community to be able to adequately respond to them - particularly through much more long-term thinking and much more long term intervention."

Street fighting among rival gangs has killed at least 30 people and displaced about 150,000 more, many still camped outside the capital in fear of fresh violence.

Veira says displaced people living in the camps are concerned that the longer the political conflict goes unresolved the harder it will be to find a solution.

The government has suffered a lack of leadership since Prime Minister Mari Alkatiri stepped down on June 26 amid accusations he helped to arm militia to assassinate his political opponents. He has denied the allegations, and ignored a court summons to answer those charges.

His political rival, President Xanana Gusmao, has yet to announce an interim successor or cabinet, but has said elections scheduled for early next year could be brought forward.

Nobel Peace Prize winner Jose Ramos Horta has been named as a possible candidate for prime minister, though he's not a member of the ruling party, Fretilin. At a meeting with Asian investors Wednesday, he said he would be ready to take the job, but indicated a new government could be weeks away.

"We have decided to wait in the formation of a new government in a week or two whenever there's a new cabinet," he said.

Fretilin has offered a list of four candidates for prime minister for President Gusmao to consider and threatens to block the country's budget if he does not choose from that list.