The remaining Australian soldiers in East Timor will begin pulling out of the country from today.

A ceremony was held late yesterday in Dili to mark the closure of the Australian-led International Stabilisation Force (ISF).

Defence Force Chief General David Hurley says the force's mission ends today.

"The International Stabilisation Force will cease security operations in this country and begin returning equipment and its people to Australia and New Zealand," he said.

Most of the 400 soldiers leaving East Timor are Australians.

General Hurley thanked them for their services.

"For more than six years the International Stabilisation Force has provided security to our close neighbour and good friend," he said.

In 2006 Australian troops returned to East Timor to restore order after a mutiny split the country's new army.

At its peak the International Stabilisation Force was made up of more than 1,000 soldiers.

East Timor's prime minister Xanana Gusmao says international help was needed to put an end to the widespread violence.

"On behalf of the government and the people of Timor Leste, I give thanks to Australia and New Zealand and the brave soldiers that served with ISF for helping us achieve stability," he said.

"As a result we now look to the future with optimism and hope."

The withdrawal of Australian troops coincides with the exit of the United Nations peacekeeping mission which has been supporting East Timor's police force.

Mr Gusmao described yesterday's ceremony as a landmark moment for the nation.

"The departure of the ISF also represents a new stage for our nation in which we must take responsibility for our own security and for the future of our country," he said.

General Hurley says East Timor's security forces have risen to several challenges this year.

"We have witnessed the successful conduct of national elections, the formation of a new government and we celebrated the 10th anniversary of restoration of independence. Each of these demonstrates marked progress," he said.

Major Dave Halliday, who is in charge of logistics, says Australian soldiers have started packing up.

"We're loading up containers for all the equipment that is returning back to Australia," he said.

"As you can imagine we've been here for quite some time and it's our unit's responsibility to get all that stuff straight back to Australia."

The withdrawal of the Australian-led force is expected to be finished by April next year.

A separate defence program that has been helping train East Timor's army will remain in the country.