The East Timorese President has chastised his country's politicians and justice officials in a stark message on the first anniversary of their independence.

During muted celebrations in the capital, Dili, Xanana Gusmao told a crowd of about 3,000 that justice officials were xenophobic and politicians were using the parliament to air their dirty laundry.

He called for the nation to move on, and urged its citizens to make good use of democracy, not just enjoy their freedom.

One year since East Timor officially gained independence from Indonesia after decades of bloodshed, Mr Gusmao said the country's 800,000 citizens face great difficulties.

'There is little food on the hearth; agricultural crops are either not sold or sold at extremely low prices; the price of imported goods are an insult to the purchasing power of the population.

'There is no prospect for employment for the youth and both the legal and the infrastructural conditions of the country do not attract investors,' he said.

Organic coffee, oil and gas are the major resources of East Timor.