United Nations peacekeepers in East Timor have handed full responsibility for policing to Asia's youngest nation, according to the prime minister.

The National Police of East Timor "are assuming full responsibility for maintaining law and order", Xanana Gusmao said in a statement on Wednesday.

In March last year the United Nations Integrated Mission in Timor-Leste handed some responsibilities to the Timorese police and has since focused on training instead of frontline duties.

The head of the UN mission, Finn Reske-Nielsen, said that under the peacekeepers' guidance the Timorese police had "made significant progress" in many areas.

The force provided security during this year's peaceful presidential and general elections.

The current UN deployment, which arrived in 2006 after a political crisis in which dozens were killed and hundreds of thousands displaced, began withdrawing in earnest this month in line with a timetable to leave by the end of the year.

The largest batch will leave in November with the last of the peacekeepers due to depart in December, Reske-Nielsen has said. At its peak, the mission had 1,600 peacekeepers.

The only major violence since the arrival of the UN force was a 2008 failed assassination attempt against then-president Jose Ramos-Horta.

East Timor, an impoverished half-island nation of 1.1 million despite bountiful oil and gas reserves off its coasts, in May celebrated a decade of formal independence after a 24-year occupation by Indonesia.