Talks were underway between the government of the tiny west African state, the United Nations and the leader of the renegade troops to broker a deal to pay the soldiers for a recent tour of duty in Liberia, the journalist said.

Hundreds of heavily-armed soldiers, some of them carrying assault rifles, had taken to the streets before dawn, firing off rounds in the direction of the military headquarters.

By mid-morning the soldiers had mostly dispersed, a diplomat in the former Portuguese colony told AFP, adding that the streets in front of the residence of interim President Henrique Rosa, the prime minister's office and the Foreign Affairs Ministry were empty.

The unrest came just over one year after controversial president Kumba Yala was ousted in a September 16 coup.

The diplomat said the protesters were young military recruits who were angry at having not yet been paid in full for serving as part of the first wave of west African peacekeepers sent in to Liberia in August of last year as rebels closed in on the capital Monrovia.

Tours of duty for battalions from Guinea Bissau, Benin, Mali and Togo, numbering 1,500 soldiers in total, ended in June this year.

UNMIL had released the funds to Guinea Bissau's central bank in August to pay some 650 soldiers provided by Bissau for the operation, but the money has not yet been disbursed, the diplomat said.

Prime Minister Carlos Gomes Junior said on Portugal Radio's Africa service, monitored in Lisbon, that he suspected some politicians were behind the unrest.

"Everything leads us to believe that soldiers from the battalion that returned from Liberia, who are demanding payment that is due to them, are responsible," the prime minister said.

"Some political leaders are egging on the soldiers to create a situation of unrest," he added.

"The politicians who are behind these incidents don't know how to lose on democratic ground. This government was legitimately elected," he said.

Gomes heads the government that was elected in March, just six months after Yala's ouster. The tiny west African country, wedged between Senegal and Guinea on Africa's Atlantic coast, is scheduled to hold a presidential ballot next year.

UNMIL spokesman Patrick Coker told AFP that the United Nations enters into agreements with countries that contribute soldiers to peacekeeping missions and remits payment to the government concerned, not to the soldiers themselves.

"The troop-contributing countries pay the peacekeepers at a rate agreed nationally that reflects the economic situation in the country," Coker said.

"The UN does not have direct influence on what is paid, how it's paid or when it's paid."

UN sources have put the amount peacekeepers are paid between 300 and 1,300 US dollars per month.

Most of Guinea-Bissau's roughly 1.5 million residents live on less than one dollar a day. The country is heavily dependent on foreign aid, and its main foreign exchange earner is cashew nuts.

Last week, Rosa called on the United Nations to withdraw its peace-building mission from Guinea-Bissau, arguing that the political instability that led to its creation five years ago after a devastating year-long civil war no longer exists, the Portuguese news agency Lusa reported.

Rosa did, however, advocate the continued presence of the United Nations in Guinea-Bissau, deeming it vital to help respond to "shortcomings and the basics needs of the people", the agency said.

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