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The Nobel laureate and former prime minister was shot twice in the stomach in an exchange of fire that cost the life of rebel leader Major Alfredo Reinado, who had been on the run since escaping jail in August 2006.

 The home of Prime Minister Xanana Gusmao, who switched jobs with Ramos-Horta after elections in May, was also attacked. The former guerrilla leader escaped without injury.

 "The condition of the president is stable, he's got a small injury to his abdomen," presidential spokesman Jose Turquel told reporters in Dili.

 A plane has left Darwin, Australia, for the one-hour journey to Dili to pick up the stricken president, who is reported to have two bullet wounds.

 Ramos-Horta shared the 1996 Nobel Peace Prize with countryman Bishop Carlos Belo for leading the diplomatic campaign to end 23 years of Indonesian occupation.

 Ramos-Horta, 58, was abroad when Indonesia invaded the former Portuguese colony in 1975. The occupation continued until 1999, when Australia led an international force that helped guide East Timor to full independence in 2002.

 James Dunn, an Australia diplomat who served in Dili and is now an adviser to its government, said he had telephoned Ramos-Horta's brother and been told that the president would shortly fly to Darwin, Australia, for further treatment.

 "It looks like a clumsy attempt at a coup, but it would appear to have backfired," Dunn told Australia's ABC Radio. "As I understand it, part of Reinado's force went to the residence of the prime minister, Xanana, but Xanana eluded them, escaped by some means."

   Dili was calm, with soldiers and police out in force to prevent further violence.

 Reinado had been arrested on charges of murder, desertion and possessing illegal weapons. He was shortly to be tried in absentia. Last week, rebel troops loyal to Reinado fired on Australian troops on a routine patrol.

 The recent troubles in the world's newest nation started in 2006 when then prime minister Mari Alkatiri sacked one-third of the army. The soldiers, who refused to lay down their arms, rallied behind leader Reinado. Alkatiri lost control of the country and handed over to Ramos-Horta.

 "This comes as a total surprise given ... the president's tireless efforts to find a mechanism of national political consensus to find solutions to the critical issues that are faced by our country," Alkatiri said in a statement.

 Damien Kingsbury, an Australian academic who has just returned from Dili, predicted that the death of Reinado - if confirmed - would spark a return to unrest that has displaced over 100,000 people and riven the overwhelmingly Catholic country, which shares the island of Timor with giant neighbour Indonesia.

 "If in fact Renaido has been killed, that's a very significant move in East Timorese politics," the Deakin University professor said.

 Last week Gusmao declared 2008 a "year of reform" in which South-East Asia's poorest country would put the chaos of the past behind it.

 "People are tired - tired of conflict, tired of suffering," the revered founding father said. "We want to shake the consciousness of the people. We have to stop hurting ourselves, killing ourselves."//dpa