East Timor's Prime Minister Mari Alkatiri is expected to resign tomorrow after receiving a request from President Xanana Gusmao to do so.

"I can confirm the letter that President Xanana Gusmao sent yesterday to Prime Minister Alkatiri. The letter is asking him to step down from office," the official who is close to Alkatiri said on condition of anonymity.

He said the prime minister would meet his council of ministers tomorrow to discuss what the cabinet thinks about the president's request.

Asked if the prime minister will resign he said: "Most probably, he will resign."

A member of Alkatiri's ruling Fretilin party told reporters today a majority of party members have demanded the prime minister's resignation, accusing him of lying about distributing weapons to civilians.

"We asked the president to suspend him as prime minister and form a government of transition while waiting for next year's election," said Vicente Maubucy Ximenes, claiming to speak for a majority of his party.

Jorge Teme, a member of Fretilin's 596-member central committee, said party members want Gusmao to lead a transitional government until elections due next year.

"With Mari Alkatiri's stepping down, we can find a solution to our problem," Teme told AFP today. He did not say how many party members supported the resignation demand.

Alkatiri has repeatedly deflected requests that he step down since violence flared last month.

Yesterday prosecutors issued an arrest warrant for former interior minister Rogerio Lobato, a close political ally of Alkatiri, on charges of supplying weapons to a hit squad he allegedly formed to target government opponents.

The group's self-declared commander has alleged the group was formed on the orders of Alkatiri to eliminate his critics. Alkatiri denies the allegations, saying they are part of plot to topple him.

East Timor erupted into violence following Alkatiri's decision to fire 600 disgruntled soldiers in March. Subsequent clashes between rival members of the security forces and gang warfare has left as many as 37 people dead.

About 100 men staged a loud but orderly protest today demanding Alkatiri resign, the second day the capital Dili has seen demonstrations against him.

"Step down Alkatiri," they shouted outside Gusmao's palace, where Alkatiri and government ministers were meeting.

"We came to force Xanana to please make a decision and to hear the people," organiser Augusto Junior Tridade said.

AFP/AP