The Indonesian military and pro-government militias continue to burn villages and towns systematically as they withdraw from East Timor, officials said today, as concern grew that U.N.-sponsored peacekeeping forces and international relief organizations are moving too slowly to impose order outside the capital.

One week after the arrival of the Australian-led peacekeeping mission, it has yet to expand its presence much beyond two landing places, and humanitarian organizations have reached only a few areas of the countryside.

They have not begun to get significant relief to the vast majority of the population, or to the hundreds of thousands of displaced people who fled rampaging militias following a U.N.-sponsored referendum Aug. 30 that indicated overwhelming support for East Timor's independence from Indonesia.

The cost of that deliberate pace began to emerge today, as observers on some of the first low-level flights over regions east and west of Dili reported that withdrawing Indonesian troops or militias, who oppose East Timor's independence, are torching more of the countryside.

"The burning is still going on. It is systematic," said Sanjay Sojwal, a World Vision aid official who was on a helicopter flight to the eastern tip of the island. He said he saw a depopulated countryside and a succession of towns completely destroyed.

"They had burned the towns--there weren't even shells of buildings standing. And then they had moved out to the villages, which were still burning," Sojwal said. "Nothing prepared me for that destruction."

Officials on a U.N. flight to the west found similar destruction.

"It's clearly a slash and burn policy," said David Wimhurst, a U.N. spokesman.

The continued cooperation between the Indonesian army and the militias has angered U.S. officials. Secretary of State Madeleine K. Albright warned Indonesia tonight that U.S. aid to the country will remain suspended until such cooperation is halted.

"I call on the government of Indonesia . . . to stop the collusion between the Indonesian military and the militias and to disarm the militias," Albright said in New York, where she met with with Xanana Gusmao, leader of East Timor's independence movement.

The peacekeeping troops have made no move to stop the militia activities outside Dili. Rather than fanning out across the territory after their arrival on Sept. 20, the forces have taken a cautious, incremental approach to deployment that reduces the chances of casualties to peacekeeping troops.

"They need to step up the tempo," said a British military source. "They should be moving more quickly and authoritatively. They have a siege mentality, and they are inexperienced at this."

The multinational force under the command of Australian Maj. Gen. Peter Cosgrove is restrained by its relatively small size. He has only about 3,000 troops on the ground and will have fewer than 8,000 when the force is fully deployed.

Cosgrove has moved slowly to allow the departure of the main force of the Indonesian army, whose reaction to the arrival of the foreign soldiers had been uncertain. He has done nothing to try to block the reported flight of thousands of the military's surrogates, the militias, into neighboring western Timor. [On Monday, the Indonesian military officially handed control of East Timor to Cosgrove and his forces.]

"He's probably operating on instructions: Don't have casualties to his forces to avoid problems at home, and don't have a lot of Indonesians dead to avoid offending the rest of Asia," an international aid official said.

So far, the multinational force has not fired a shot, and there have been no military casualties. But it was not until the fourth day after their arrival that Cosgrove's forces appeared in the center of Dili, the capital, and the peacekeepers have not yet taken control of the access roads that lead to the nearby mountains where thousands of refugees are living on roots and meager vegetables.

The forces also have secured a beachhead in Baukau, 70 miles to the east, but have not yet moved beyond the port and airport. No troops have moved into the interior of East Timor.

Cosgrove describes his approach as "methodical." His plan so far is to take over small areas with large forces to dissuade any resistance.

Most aid organizations have been content to follow the military strategy, and say they cannot operate in areas not yet occupied by the peacekeeping forces.

"We don't want to take the risk of going by road. We don't want any more security incidents. We've had enough of that," said Jean-Michel Monod, the Asia director of the International Committee of the Red Cross, which has seen some of its people attacked.

Aid organizations also say the humanitarian crisis is not as acute as feared. Instead of needing immediate food aid to arrest mass starvation, the largest aid groups say they have found their tasks will be more lengthy and complex. They must reunite splintered families, resettle an uprooted population, repair flattened towns and villages and rebuild the economy.

The displaced people reached so far by aid workers are not in a life-threatening condition, as some reports from East Timor had suggested. However, many are hungry and subsisting on a poor diet. They have little medical care, and some of the weakest among them have died.

"The cemetery has a fresh grave for a little baby," said the Rev. Ricardo DaSilva, a Roman Catholic priest with the displaced people in the mountaintop area of Dare, 10 miles from Dili. "Why a baby? Because she has no good food."

But most are surviving, and some relief agencies say it might be best to try to feed them in the countryside rather than encourage them to return to destroyed homes.

"We have to get help up there to them, and slow the pace of return to Dili," said Symeon Antoulas, the director of the Red Cross in East Timor. "If they all came down at once to Dili, it would exacerbate the problems of food, water and shelter."

Relief agencies say their biggest task may be trying to reknit East Timor's society.

"The media is focusing on physical needs--food, water and shelter. That is important, but there is also psychological stresses of security and what happened to their families," Antoulas said. "We need to start coming to grips with the problems of tracing relatives."

Huge numbers of families are splintered in East Timor because the men, fearing they would be killed, fled to the hills, and their families were then taken to western Timor hundreds of miles away, where they are in camps controlled by the militias. Few have returned, and it remains unclear if they are free to leave the camps, or how they would get back.

"The aim of the operation in west Timor would be to get to the point that the people can really choose where they want to go," Monod said.

CAPTION: A British Gurkha serving on the peacekeeping force patrols outside a military compound in Dili that Indonesian troops set on fire when they withdrew.