Weapons collections and an attempt to introduce gun control legislation to parliament are signs the government is aware there is a problem, the report's author says.
However, it is the current and previous government's lack of small arms control within the security forces that poses the greatest danger.
In June, the government introduced a new gun law to parliament, but it was widely criticised for seeking to allow civilians to be armed, and because it put the power to issue gun licenses solely in the hands of the police commander.
A revised version of the law is to be put before parliament in the coming weeks.
Author of the Small Arms Survey report on East Timor, Edward Rees, told Radio Australia's Connect Asia program these moves, along with an increasing public and political awareness about the number of weapons that are missing, is a sign the government has finally realized that arms control is a problem.
"I think it's pretty clear that this government, and the political leadership in general and the community have had enough of guns wandering around the community and villages, and would like them put back safely in the armories," he said.
"However, while they may be put back safely in the armories, they were safe in an armory before and then taken out and used.
"And historically guns in armories in East Timor have been badly managed".
The mismanagement of weapons by authorities is a common thread throughout East Timor's relationship with small arms over the past fifty years.
Most recently, soldier-turned-rebel Alfredo Reinado and his followers, who were in possession of police weapons, shot and seriously injured President Jose Ramos-Horta in February this year.
Reinado was killed during the subsequent gunfight.