By Ed Davies

DILI, June 30 (Reuters) - East Timor's charismatic resistance hero Xanana Gusmao has always appeared a reluctant leader, previously declaring his true dream was to be a pumpkin farmer.

But after serving as the nation's first president for five years until last month, the fighter-turned-politician who battled Indonesian forces in the hills for years before being captured now has his eyes on the more hands-on job of prime minister.

To pursue his bid, Gusmao launched a new party, the National Congress for Timorese Reconstruction (CNRT), to contest Saturday's parliamentary elections and break the grip on power held by the Fretilin party since independence five years ago.

He appears to have become increasingly frustrated by the pace of progress under Fretilin and the factional infighting that has been blamed for contributing to the chaos and bloodshed last year when the army tore apart along regional lines.

After his appointment in March as leader of CNRT, he pledged to lead the country on a new path.

"CNRT has already liberated our nation and the existence of CNRT now is to liberate our people from poverty and injustice," Gusmao said after taking up the party leadership.

Gusmao's political party shares the acronym with an East Timorese resistance movement against Indonesia's 24-year occupation, the National Council of Timor Resistance.

Jailed by Indonesia for seven years, Gusmao is widely respected and seen as one of the few people able to heal the divisions in the young nation.

If he does get the job of prime minister, he faces huge challenges.

In particular, how to ease chronic poverty and cut massive unemployment, both of which have fuelled a culture of gang violence.

About 10 percent of the population remains displaced, with about 30,000 in camps dotted around the capital. Most are reluctant to go home in the face of sporadic violence, vandalism and arson.

But Gusmao is used to battling stiff odds.

Born in the town of Manatuto on June 20, 1946, he is the second son in a family of nine children. He spent four years at a Jesuit seminary in Dare, near the provincial capital Dili, and also attended Dili High School. He never finished.

He did three years compulsory service in the colonial Portuguese forces and later worked in the local government department of the colonial administration.

He later moved to Australia and became involved with the Fretilin party, which was coming into its own as Portugal began to decolonise its territorial possessions.

Gusmao left Australia in November 1975, travelling to his homeland a week before the invasion by Indonesian troops.

He stayed and joined the armed opposition, and took over Fretilin's military wing in 1978. Until his capture in 1992, he led an ill-equipped band of guerrillas against Indonesia's vastly superior forces, becoming a legend among his people.

Gusmao is also a talented writer and in 1974 won East Timor's poetry prize for a poem called "Mauberedias," inspired by famed Portuguese poet Luis De Camoes' epic "Lusiads".

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