Manning a machine gun on top of a New Zealand army truck, Private Chas Takiwa watched a breezeblock house burn out of control, the flames sending a dark column of smoke into the sweltering tropical air.

"Not much we can do about that one," Private Takiwa, 19, said as the four vehicle New Zealand patrol continued on its way along a lane fringed with banana palms and thatched huts on the outskirts of East Timor's capital.

Without proper firefighting equipment the 2,500 New Zealand, Australian, Portuguese and Malaysian troops sent to restore order in Dili are powerless to combat the arson attacks which continue to sow fear across the city, reported the South China Morning Post.

The communal hatreds and ethnic tensions, which are fuelling Dili's violence, contrast with the ecstatic welcome the international forces receive everywhere they go in this dirt-poor city.

Dozens of homes and businesses have been destroyed in the past three weeks by gangs of youths loosely allied to feuding factions of East Timor's armed forces.

The split erupted when Prime Minister Mari Alkatiri sacked about 600 of the 1,400- strong army for mutiny when they protested about alleged discrimination against soldiers from the east of the country.

The violence is the biggest crisis to hit East Timor since the country became independent in 2002 after being run by the United Nations following a referendum that ended decades of bloody rule by Indonesia.

The 166-strong New Zealand contingent is patrolling on foot and in vehicles from their newly established base in a police station in the flashpoint suburb of Becora.

Spears, knives, machetes and lethal home-made darts have been confiscated, along with the cheap disposable lighters which are used to such lethal effect by arsonists.

A man with a pet monkey on a string leash grinned and gave the victory sign, and women with their teeth stained red from chewing betel nut smiled and waved as an Australian army Blackhawk helicopter clattered overhead.

"We get lots of friendly greetings but then you turn your back and the fires start," said Lieutenant Marcus Bunn, one of the officers in charge of the patrol.

A few kilometres up the road a foot patrol had detained a band of suspected looters and arsonists, a rare victory in the frustrating cat and mouse game which the Australians and New Zealanders find themselves involved in.

The men and teenage boys squatted on the floor guarded by soldiers with Steyr automatic rifles.

Beside them was a small pile of weapons, including hammers, scissors and a crude home-made axe.

Like most East Timorese they were short and slight, barely chest-high to the much bulkier and taller New Zealand soldiers.

A few metres away, a tangle of smouldering wood and corrugated iron was all that remained of a clutch of torched homes.

"We were on a routine patrol and we came across them systematically looting houses," said platoon Sergeant Haaka Rogers. "We tried to stop as many as we could and apprehended 19."

The suspects would probably be released after 24 hours in detention, but the New Zealanders hope that their apprehension will serve as a deterrent to others.

"They are really worried," said Nico da Silva, a former tourist guide and English teacher now working as a translator for the army. "They are asking me if they will be detained for a long time."

The gang was made up of men from the west of East Timor who were intent on torching and looting the homes of people from the east of the country.

"A few days ago some easterners burned their houses. Now it's payback time," da Silva said.