JAKARTA, Nov 8, Reuter - The Indonesian military said on Thursday it was not responsible for a spate of murders that is littering troubled Aceh province with unidentifiable corpses.

A human rights lawyer recently returned from Aceh said residents report finding mass graves and a steady flow of decomposing corpses which they believe are the work of soldiers trying to quash a rebellion by terrorising people.

The military say the murders are the work of rebels, known as the Security Disturbing Movement or GPK.

"It's psychological warfare, whoever can influence more people. But there is no need for us to cover the facts. If it were done by the military we would say so," military spokesman Nurhadi Purwosaputro told Reuters.

Human rights sources say decomposing bodies of people who are not known locally are found in plantations and rivers around northeast Aceh, the heart of the troubled zone in the province on the northern tip of Sumatra, Indonesia's main island.

In one incident, villagers working on a riverbank found eight bodies tied together, weighted down and drowned.

"It's got to the point where villagers say they are bored of having to bury bodies they fish out of the river. It happens pretty much every day in some areas," the lawyer said.

A Western human rights observer said he had reliable reports dating back to June of a mass grave discovered in Alue Mira district. Another source confirmed the report.

"Nearby villagers couldn't eat because of a foul smell in the air. They went to investigate and found an open pit with 200 bodies in it, some of them completely rotten. Reports were completely supressed by local officials," he said.

"No, no. Alue Mira is a good area," was Nurhadi's response to the reports.

He said the military had suffered in the shadowy rebellion in which ex-soldiers dismissed by the army appear to have banded together with militant Islamic separatists to oppose Jakarta, which they say has deprived the Acehnese of their rights.

"There are many casualties in the army and the police, some of them even..." he drew his finger across his throat to indicate beheading.

Nurhadi said local people who had been detained by the military were often killed by GPK members on their release. "Very often it is the GPK themselves who kill them because they think they have become informers," he said.

Political analysts say the steady stream of murders is part of a classic pattern of Indonesian military behaviour. "It's the most normal thing. After a military operation there is an intelligence operation to terrify locals," one said.