East Timor's ruling party will give the country's president a list of prime ministerial candidates on Friday and Nobel prize-winning Foreign Minister Jose Ramos-Horta may be on it, party members said.

Nobel laureate Jose Ramos-Horta (L) talks to a Portuguese soldier in Dili. Ramos-Horta has said he is one of three short-listed candidates nominated by East Timor's ruling party to become the next prime minister of the crisis-wracked nation.[AFP]

Fretilin, the party of ousted Prime Minister Mari Alkatiri, earlier threatened to block passage of the budget unless President Xanana Gusmao backed one of its nominees, raising fears of a political showdown.

The three candidates under discussion Thursday were Ramos-Horta, an independent and Gusmao ally, and Fretilin members Ana Pessoa and Stanislau da Silva, said Harold Moucho, a senior Fretilin party adviser.

Finding a replacement for Alkatiri is seen as key to ending months of violence and political unrest in East Timor.

His dismissal of 600 soldiers in March _ nearly half of the armed forces _ sparked street battles in the capital that spilled into gang warfare and widespread looting and arson.

At least 30 people were killed and 150,000 forced from their homes.

"Today we are finalizing the names for the prime minister post," said senior party official Elizario Ferreiara. "We will give the list to the president tomorrow morning."