East Timor's Gusmao quits as party leader

East Timorese political heavyweight Xanana Gusmao has resigned as president of his party, saying the CNRT has lost the trust of the people.

Independence leader Xanana Gusmao has resigned as president of his party following their recent election loss, reportedly saying the East Timorese people had lost faith in them.

The National Congress for Timorese Reconstruction (CNRT), headed by the former president and independence leader, lost eight seats in parliament following last month's election.

Mr Gusmao resigned as president at the party's conference in the capital Dili on Friday, saying the party had lost the people's trust, state news agency Tatoli reports.

"The majority of people don't trust CNRT's program, this is shown in voters' numbers being down," he reportedly said.

However, he said he would still work with the party towards a better future.

He also urged the party's members to be an opposition force in the next parliament, rather than work on a unity basis with the leading party Fretilin, which seized 23 seats compared with CNRT's 22.

"CNRT's presence in parliament as opposition will contribute positively and constructively to serving our beloved country of Timor Leste," Tatoli reported Mr Gusmao as saying.

A party spokeswoman confirmed to AAP that Mr Gusmao had resigned but would not comment further.

The once unlikely alliance between CNRT and Fretilin in 2015 has been credited with bringing about much needed political stability.

But it has also been criticised for leading to a lack of opposition voices.

A major concern has been the country's over-reliance on oil and gas revenue to fund projects, salaries and services, with fears that unless the economy diversifies quickly, the country will run out of money within 10 to 15 years.

CNRT and Fretilin have been criticised for pumping too much money into large-scale infrastructure projects and not enough into basic needs such as education, health and sanitation.

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