Nobel Peace Prize laureate Jose Ramos-Horta became East Timor's new prime minister Saturday, shouldering the challenge of returning the young nation's stability after months of violence and political turmoil.

President Xanana Gusmao announced the formation of a new government, filling a void created when former Prime Minister Mari Alkatiri resigned last month amid allegations he formed a hit squad to kill his political opponents.

Ramos-Horta's success, analysts said, will hinge on whether he can win support from Alkatiri's ruling Fretilin party, whose members reluctantly backed the appointment of a political outsider.

Many in East Timor blame Alkatiri's dismissal of 600 soldiers — nearly half the country's armed forces — for May street battles that erupted in the capital between police and army units and later spilled into gang warfare, looting and arson.

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

"Today I officially announce the new government of East Timor," Gusmao told reporters after emergency talks with Fretilin. "The prime minister is Dr. Jose Ramos-Horta."

He said he hoped the move would help "bring about the process of healing and bring peace and stability to the people of East Timor." The first and most important task, he added, was getting tens of thousands of people out of refugee camps and into their homes.

The recent violence was the worst to hit the country of less than one million people since its 1999 vote for independence after 24 years of Indonesian rule. Though the violence eased with the arrival of 2,700 foreign peacekeepers six weeks ago, isolated incidents still occur.

At least one house was set on fire in downtown Dili Saturday, but no one was injured and the motive was not immediately clear.

Analysts said finding a prime minister acceptable to both Gusmao and Fretilin, who in recent years have rarely seen eye-to-eye, was key to ushering in political stability ahead of next year's election.

The party provided Gusmao with a list of four candidates — among them Ramos-Horta, who won the 1996 Nobel Peace Prize for championing the cause of East Timor's resistance struggle during nearly two decades in exile.

His greatest challenge will be to quickly address splits in the security forces, fully investigate killings and forge political support within Fretilin, which has seen internal divisions harden in the recent turmoil.

Many members opposed Ramos-Horta, 56, who is a close political ally of the president.

"They would be making a considerable compromise in accepting him as prime minister," said Mark Aarons, an author and political commentator who has followed East Timor since the 1970s. "I hope they are sincere and prepared to unite around a new government."

Ramos-Horta, who was foreign minister in the previous government and took on the portfolios of interior and defense after the latest unrest, will be inaugurated as prime minister within days, Gusmao said.

Alkatiri, meanwhile, was told he would have to answer to questions that he knew weapons were being funneled to civilian militias during the unrest to terrorize his opponents.

Prosecutor-General Longuinhos Monteiro said in a mobile phone text message seen by The Associated Press that Alkatiri had been summoned for questioning "as a suspect in the case." He did not elaborate.

Officials from the prosecutor's office were not immediately available to confirm the message, and Alkatiri's spokesman could not be reached for comment.