(Adds Reinado's comments, background)

DILI, March 4 (Reuters) - An Australian-led international peacekeeping force launched a raid to capture East Timor rebel Alfredo Reinado on Sunday, killing four people, an Australian commander said.

Reinado, who led a revolt that plunged the tiny nation into chaos last May, evaded capture and denied any of his men had been killed.

"This morning international security forces did conduct military operations in Same, south of the capital Dili, to apprehend Alfredo Reinado. At this stage we have not apprehended him," Australia's Defence Department said.

"There was no ISF (international security force) member killed or injured in the operation," a Department of Defence spokesman said, adding that four East Timorese fighting with Renaldo had been killed.

Reinado has been on the run since he escaped from jail in East Timor's capital Dili in August along with 50 other inmates.

"The number of soldiers is still complete. Only one person was wounded," Reinado said, adding some Australian troops were shot.

President Xanana Gusmao ordered security forces to arrest Reinado following accusations the rebel led a raid on a police post and made off with 25 automatic weapons last month.

Reinado denied attacking the police post, saying that police had given him the weapons.

On Saturday, he told Reuters he was willing to negotiate with the government but would not surrender to international troops.

"I am the one who proposed to solve this problem only through negotiation and dialogue," Reinado told Reuters by telephone.

"I always say that don't use weapons power to solve a problem because it cannot have good results but only take lives and disturb state security."

"I will only surrender to the law, not to any international power," Reinado said. "I will not surrender for the president and prime minister's interest. I will surrender only for the peoples' interest."

Australia has 800 troops to keep peace in East Timor following last year's violence.

Reinado has made several public appearances since the escape, including a meeting with the country's military chief. Security forces did not make any attempt to arrest the fugitive.

The standoff between Reinado and the troops has raised fears of violence in the country ahead of a presidential election next month.

Indonesia has temporarily closed its border with East Timor to prevent Reinado and his group sneaking into Indonesian territory at the request of East Timor's government.

Australia has warned of increased violence ahead of the poll after clashes between its peacekeepers and East Timorese refugees left two civilians dead last month.

East Timor voted in a 1999 referendum for independence from Indonesia, which annexed it after Portugal ended its colonial rule in 1975. The country became fully independent in 2002 after a period of U.N. administration.

But an east-west divide in the impoverished nation erupted into chaos and gang violence in May following the sacking of 600 soldiers. High youth unemployment also plagues the country, where more than 100,000 people are displaced.

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