"We will do everything we can to raise awareness among the people so they can combat through legal means this usurping of power"
Mari Alkatiri, Fretilin leader
Mari Alkatiri, the Fretilin leader and former prime minister, on Tuesday vowed to challenge the legality of the new government but told supporters to employ legal means, not violence, to achieve its goals.
"We will do everything we can to raise awareness among the people so they can combat through legal means this usurping of power," he said.
But Mateus Fernandes, the police commander, said security forces had to fire tear gas after Fretilin supporters burned tyres and blocked roads in the city.
"We also received information that some people burned houses. We still don't know the scale of the damage or if there are any casualties," he added.
Alkatiri said on Tuesday: "The president's decision is not based on the constitution. The president is not respecting the people's expectations of the elections."
Ramos-Horta had appealed for the two political blocks to form a national unity government before making the announcement on Monday that Gusmao would be sworn in as prime minister on Wednesday.
But Alkatiri said the party would not work with the government because it considered the appointment "a political and illegal decision".
Fretilin has also threatened to withdraw from parliament if Ramos-Horta went ahead with his plans.
The UN's special representative to East Timor praised the Ramos-Horta's decision, saying he had worked hard to find a solution that best served the interests of the nation.
Atul Khare also said Fretilin should be commended, noting that the party was only suggesting that the use of legal means to oppose the move, as was its right.
There were no injuries reported and the some 3,000 international police and army in the country were containing the violence, a UN spokeswoman said.
East Timor broke free from decades of Indonesian rule in 1999 in a UN-sponsored referendum.
Three years later it became Asia's newest nation, but the euphoria quickly evaporated amid the challenges of governing a divided and poverty-stricken nation.
Last year, a military mutiny sparked clashes between rival troops that morphed into gang violence, arson and looting.
More than 35 people were killed and some 150,000 others fled their homes before the collapse of the government and the deployment of foreign peacekeepers.