President Clinton, citing "gross abuses" in East Timor, moved yesterday to isolate Indonesia by cutting off U.S. military ties, and the International Monetary Fund effectively suspended its multibillion-dollar lending program to the Southeast Asian nation.

Clinton called on the Indonesian government to accept an Australian-led international military force to restore order in East Timor, which voted overwhelmingly in favor of independence in a referendum last week. Clinton said the United States would back the Australian-led mission, which so far Jakarta has rejected. While Pentagon officials said any U.S. role would likely be limited to airlift, communications and other logistical support, the president did not rule out participation by American ground forces.

"I think the United States should support this mission," Clinton said. Speaking on the South Lawn of the White House, he added, "A lot of those people, starting with the Australians, have been with us every step of the way for decades now, and I think we have to be involved with them in whatever way we can."

The sense of urgency for an international peacekeeping force grew yesterday as Western diplomats, East Timorese resistance sources and Vatican media said that a systematic campaign of political assassination appeared to be underway in East Timor. Those killed in recent days include the 82-year-old father of East Timor independence leader Xanana Gusmao; the head of the Vatican-sponsored Caritas charity in the East Timorese capital of Dili; and three priests and nearly 100 other people at a church complex in Suai.

The bloodshed has prompted sharp responses from the IMF and World Bank, which generally do not overtly mix politics with lending decisions. The IMF yesterday said it had put "on hold" a mission scheduled for mid-September; without that visit, its board cannot approve further loans. The IMF had expected to disburse the last $2.2 billion of a $12 billion package over the next 14 months.

"We believe that assistance from international lending institutions is effectively cut off from now," Undersecretary of State Thomas Pickering said in testimony before a joint hearing of the House and Senate subcommittees on East Asian and Pacific affairs.

World Bank President James D. Wolfensohn sent an unusual letter to Indonesian President B.J. Habibie saying that "for the international financial community to be able to continue its full support, it is critical that you act swiftly to restore order and that your government carry through on its public commitment to honor the referendum outcome." In past years, Indonesia had been one of the four largest recipients of World Bank assistance.

Foreign assistance has been critical to Indonesia, the world's fourth-most populous nation, since the financial crisis hit Asia in late 1997. Indonesia's economy shrank by 13 percent in 1998, but grew by 1.8 percent in the second quarter of this year. Concern over a bank scandal combined with the rising violence in East Timor has driven the Indonesian stock market down by more than 25 percent in local currency and depressed the value of the Indonesian rupiah since June 22.

"It would be a pity if the Indonesian recovery were crashed by this," Clinton said yesterday. "But one way or the other, it will be crashed by this if they don't fix it. . . . Nobody is going to want continue to invest there if they're allowing this sort of travesty to go on. So I think, one way or the other, the economic consequences to them are going to be very dire."

Talk of dire consequences was designed to pry an invitation from Indonesia for an international peacekeeping force. Anxious to avoid direct conflict with Indonesian forces, the United States, United Nations and others remain reluctant to intervene without agreement from Jakarta.

"The Indonesian government and military are responsible for the safety of the East Timorese and of the U.N. mission there," Clinton said. "If Indonesia does not end the violence, it must invite -- it must invite -- the international community to assist in restoring security."

In Jakarta, Indonesian officials warned again yesterday that international pressure for intervention could backfire by strengthening nationalist feelings -- possibly leading Indonesia's legislature to refuse to ratify the independence vote.

Clinton's decision to suspend military ties was partly symbolic. The military aid program with Indonesia costs just under $500,000 a year. Though over the years many senior Indonesian military officers have received U.S. training, U.S. military relations already had been curtailed over human rights concerns. In June 1998, the U.S. suspended a special forces training program, but had continued as recently as last month periodic exercises focused on humanitarian assistance and disaster relief efforts.

News of the cut in ties was delivered to Indonesian Defense Minister Gen. Wiranto by Adm. Dennis Blair, chief of U.S. military forces in the Pacific, at a half-hour meeting in Jakarta yesterday. The United States also suspended an invitation to Wiranto to attend a meeting of Asia-Pacific defense chiefs in Hawaii next month.

Gen. Henry H. Shelton, at a Senate hearing on his nomination for a second two-year term as chairman of the Joint Chiefs of Staff, said he spoke to Wiranto directly on Monday and "laid out to him in no uncertain terms what I felt like we needed to see from Indonesia."

Shelton said the crisis in East Timor presented no threat to U.S. national interests that would justify placing American troops on the ground there. But he said a small U.S. military team had been sent from Hawaii to Australia to help plan a possible evacuation of several hundred U.N. workers and a larger potential peacekeeping operation that could include other Asia-Pacific nations. Three U.S. warships -- a cruiser, destroyer and an ammunition supply ship -- were either in the immediate vicinity or en route, Pentagon officials said.