More than 100,000 people fled their homes and settled in camps across East Timor when violence erupted in 2006.
As Radio Australia's Stephanie March reports from the capital, Dili, officials and aid agencies have been discussing the challenges posed by the large numbers of refugees now returning home.
East Timor's prime minister, Xanana Gusmao, says land issues and a lack of job opportunities are among the problems that need to be addressed, now that more than half of the nation's internally displaced people have returned to the communities they fled from two years ago.
The government is struggling to provide adequate services such as water and education to communities where large numbers of refugees have returned in recent months.
Finn Reske-Neilsen from the United Nations Development Program says both short and long-term issues need to be considered.
"There will be a need to address the social jealousy due to IDPs returning with their recovery packages, and to address broader issues," he said.
East Timor's government hopes to close all the internal refugee camps by February 2009.
- Australian Broadcasting Corporation
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