Alatas, left, Annan and Gama

UNITED NATIONS (CNN) -- Portuguese Foreign Minister Jaime Gama appeared pleased Tuesday, after the first day of intensive talks with Indonesia aimed at resolving a 23-year-old territorial dispute over the island of East Timor. The discussions were to resume Wednesday.

Portugal colonized East Timor and ruled it for 450 years before Indonesia invaded the territory in 1975 and annexed it a year later. The move never was recognized by the United Nations.

"We have made some progress and we hope to conclude tomorrow," Gama said. "We are ... going into more effective negotiations than during previous meetings. Also the input of the United Nations has been strong and that also created an atmosphere for handling specific points."

U.N. Secretary-General Kofi Annan first met separately with Indonesian Foreign Minister Ali Alatas, then talked with his Portuguese counterpart before beginning Tuesday's formal round of talks.

Some Indonesian troops left East Timor last week as a goodwill gesture

The three men met Monday night for dinner, which delegates said was friendly and filled with hopes that after 15 years of U.N.-mediated talks, a solution finally could be found.

Hopes of a possible breakthrough came in May when economic and political turmoil in Indonesia ended 32 years of rule by President Suharto.

Soon after President Habibie took office, he offered to give East Timor the right to govern itself except for defense, financial and international affairs.

However, Indonesia has ruled out any referendum or popular vote, as called for by Portugal and those seeking independence for the territory's 800,000 predominantly Roman Catholic inhabitants.

"All of us need to be flexible if we want to get positive results," Gama said.