In a joint statement issued at the end of a two-day conference in the East Timorese capital of Dili, two East Timorese bishops, Nobel laureate Carlos Ximenes Belo and Mario do Carmo Lemos, and West Timor's bishops Petrus Turang and Pain Ratu also called for smooth return of the refugees.
The talks focused on reconciliation between pro-independence and anti-independence East Timorese, and discussed ways of resolving the dragging refugee problem. It was mediated by Vatican envoy to Indonesia Renzo Fratini.
"We have the impression that many of the refugees want to go back to East Timor," the four said in the statement read out by Belo, according to the Indonesian state news agency Antara.
The statement also said the church was ready to promote reconciliation between pro-independence East Timorese and those who opposed the territory's breakaway from Indonesia, which annexed the region in 1976.
"We reaffirm our support for efforts by the Indonesian government to provide security for the refugees, to facilitate their return and to monitor anyone who is exploiting the refugees' suffering for their political and economic benefits," they said.
Some 250,000 people were forced out of East Timor into West Timor in September 1999 when pro-Jakarta militias went on the rampage, angered by the province's overwhelming vote for independence from Indonesia.
Many have returned home to East Timor, but it is estimated that up to 100,000 remain trapped in the camps in West Timor, where militias reportedly still hold sway.
Attempts to reconcile the two rival East Timorese groups have been hampered by the grindingly slow legal system, which has been forced to set free many of those blamed for the violence which erupted after the UN-held ballot.
In Australia, a priest who heads the Jesuit Refugee Service said on Thursday thousands may decide not return home because they had links either to Indonesia or to the pro-Jakarta militias.
Father Frank Brennan told ABC Radio the UN refugee agency estimated that up to 19,000 refugees belonged to families which had at least one member "in receipt of an Indonesian government pension or salary."
Others were militia members or families of militiamen for whom the option of returning to East Timor was unattractive.