BANDA ACEH, Indonesia (Reuters) – Indonesian troops parachuted into Aceh and warplanes bombed rebel bases as the military launched a major offensive just hours after martial law was declared in the troubled province.

Smoke rose from hills after two Indonesian war planes swooped low over a rise, not far from the airport at the provincial capital, Banda Aceh. Hercules transport planes dropped hundreds of troops near the airport.

Around 700 fresh marines also came ashore near the industrial town of Lhokseumawe.

“Their job is to destroy the armed forces of GAM through to their roots,” military chief Endriartono Sutarto said, referring to the Free Aceh Movement.

Just after midnight on Sunday, President Megawati Sukarnoputri gave the go-ahead for war against the rebels after last-ditch peace talks in Tokyo collapsed, leaving a landmark peace pact welcomed by Aceh’s four million people in tatters.

It is one of the Indonesian military’s biggest campaigns since the 1975 invasion of East Timor.

Sutarto said the military had detected key GAM leadership sites and early operations were aimed at taking those out. The aim was to reduce GAM to its “smallest unit” within six months.

Military officials said there had been at least two firefights with rebels on Monday. They also said they had caught eight rebels, a claim a GAM representative denied, who insisted the separatists would fight on.

LITTLE SIGN OF MARTIAL LAW

In Banda Aceh, 1,060 miles northwest of Jakarta, there was little sign of martial law as children went to school, shops opened and cars and motorbikes jostled for space on roads.

But in Glee Iniem village, residents felt the first sounds of war when the Indonesian war planes fired their rockets.

“The sound…was like thunder. They were combined with gunfire, shocking us so we are now afraid to go outside,” said Usman Hanfiah, 50, who dropped plans to inspect his rice fields.

“I don’t know what has happened but I heard there would be a military operation. What kind of operation? I am clueless,” he said in front of his modest house, its windows and doors bolted.

Megawati said GAM’s refusal to give up its 27-year demand for independence gave her no option but to declare martial law.

Her increasingly tough stance # not a total surprise considering her nationalist roots # has won praise among ordinary Indonesians and should be a boost going into the country’s first direct presidential election next year.

It also confirms the military’s inside track on national decision-making after several years of keeping a relatively low profile. The military’s image was tarnished under the authoritarian President Suharto, who stepped down in 1998.

But images of fresh conflict will do little to convince investors that Indonesia is safe for business, even though Aceh has seen violence for decades. Exxon Mobil, which operates some of Indonesia’s biggest natural gas fields in Aceh, said its production was unaffected and had no plan to evacuate staff.

The Aceh peace agreement was beset by bickering and mistrust over the issue of independence, which GAM has long demanded but Indonesia refuses to give. The peace pact did not address this in detail, focusing more on trying to halt the fighting.

GAM has said it was ready to resume one of Asia’s longest-running separatist wars in which 10,000 people have died.

The staunchly Muslim province is one of two separatist hot spots in Indonesia. The other is Papua in the far east.

The government has boosted troops and police here from 38,000 to more than 45,000. GAM has an estimated 5,000 fighters.