Two pro-Indonesian militiamen were killed and two Australian soldiers wounded today in an ambush of an Australian military convoy in the East Timorese town of Suai. It was the first gun battle of the 17-day-old international mission to bring peace to the violence-wracked territory.

The militiamen, armed with assault rifles, opened fire as the Australians were passing through Suai after completing an assignment about nine miles away at the border with Indonesian-ruled western Timor. The peacekeeping troops had been repatriating western Timorese militiamen captured during an earlier sweep of Suai, according to the commander of the multinational intervention force.

In a briefing late tonight, Australian Maj. Gen. Peter Cosgrove, commander of the peacekeeping force, said that after the convoy was attacked, the troops counterattacked, killing two militiamen. He said the two wounded Australians would be "fine" but may have to return home for medical treatment.

"This is the first time that Interfet soldiers have been wounded," Cosgrove said, using the acronym for the U.N.-backed International Force for East Timor. Calling the ambush "a sneak attack," Cosgrove added, "Interfet soldiers will not tolerate this."

Earlier in the day, Australian, British and New Zealand troops moved into Suai, a notorious militia stronghold near the southwest coast, and cordoned off the town to search for weapons and gunmen. Cosgrove said militia trucks made a hasty exit out of Suai as the troops moved in, and that one truck tried to run through a checkpoint. At that point, he said, the troops fired at the tires, and ricocheting bullets slightly wounded two militiamen inside. He said two others in the truck suffered "scratches and bumps" when the truck crashed and that all the wounded militiamen were flown to Dili, the East Timor capital, for treatment.

Until today, the operation to secure East Timor--which was ravaged by Indonesian military and militia violence following the announcement in early September that the territory had voted overwhelmingly for independence from Indonesia--had gone surprisingly smoothly. Each time peacekeeping troops moved to occupy more territory, the militias have fled. But in an interview last week, Cosgrove warned against complacency, predicting there would eventually be a confrontation and that militiamen were likely to be killed.

The peacekeeping troops were clearly hoping their show of force today would send a message that they are serious about disarming the militias and bringing peace to East Timor, and that they are willing to use the broad powers given to them under the U.N. Security Council mandate.

Today's violence in Suai came on the same day that Dili celebrated the return of Roman Catholic Bishop Carlos Belo, who was forced to flee a month ago as his house was set afire by anti-independence militiamen and thousands of followers who had gathered at his compound were being deported, most likely to western Timor.

"It's very bad," Belo said of the ravaged capital as he met with senior U.N. officials here. "It's worse than hell. We haven't seen hell yet, but this is really it."

At sunset, Belo returned to his compound, where hundreds of people greeted him. They cheered as he stepped from a white U.N. van, with two Australian soldiers on either side of him cradling submachine guns. People pressed forward to touch his hand and kiss his ring. He smiled broadly, patted children on the head and said "Good afternoon" in Portuguese to each of the well-wishers.

His once elegant, colonial-era home is a burned-out shell, looted of all its furniture. The only remaining fixture is a life-size statue of the Virgin Mary, with a gaping hole where the nose and mouth should be and both hands missing. Belo will stay for the time being in a smaller house behind his destroyed home. At sunset, after the crowds had departed, he dismissed his Australian guards, saying, "Thank you very much. I will stay here." Then he met with local priests over coffee.

U.N. officials said they consider Belo's return to Dili a key event that might help the East Timorese shake off the trauma of recent weeks and begin rebuilding their lives.

Another major event will be the arrival of East Timorese resistance leader Xanana Gusmao, who is widely expected to become the first president of independent East Timor. Gusmao and independence campaigner Jose Ramos-Horta, who shared the 1996 Nobel peace prize with Belo, are scheduled to return from abroad next week.

CAPTION: An East Timorese refugee kisses hand of Bishop Carlos Belo, who returned to Dili after a month in exile, describing the capital's condition as "very bad."