Foreign observers invited into the Tibetan capital, Lhasa, reported a city badly scarred by days of unrest and a heavy Chinese security presence still highly visible on the streets.

Operating under strictly controlled conditions, a group of 26 international reporters was driven into the city yesterday by the Chinese government as part of an effort to convince the outside world that life there is returning to normal and that Beijing is back in control after facing its most sustained opposition for 20 years.

It was the first time that foreign observers had been allowed in since fierce rioting in protest at Beijing rule left dozens of people dead in Tibet and neighbouring Chinese provinces.

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As President George Bush expressed his concern at the military reaction to the protests in a telephone call to the Chinese President, Hu Jintao, increasing the international pressure over human rights in the approach to this summer's Olympic Games, the observers described a city still under siege with heavily armed police in camouflage uniforms stationed outside government buildings and officers patrolling every intersection.

It is more than two weeks since the height of the violence and the Chinese military crackdown in which anti-government campaigners say up to 140 Tibetans died. The unrest prompted Beijing to deploy thousands of troops to the region and order a news blackout on the country's interior. China puts the death toll at 19.

The journalists were flown to the city and taken on a bus tour. Police questioned by reporters said they were carrying out routine vehicle checks for fake licence plates and people travelling without seatbelts.

There were signs of every day life returning. The Potala Palace, the traditional seat of Tibetan power, was re-opened yesterday for the first time since 14 March, while in nearby Potala Square reporters spoke to locals who said that although security continued to be tight, they were allowed to move around the city.

Lhasa also bore scars from the rioting. Just a few blocks from Potala many shops thought to be owned by ethnic Chinese were burnt out. Others, festooned with white ceremonial scarves to signify their owners were Tibetan, remained untouched. On Qingnian Road, a red banner bearing one of President Hu's favourite slogans – Construct a Harmonious Society – remained intact but a two-storey medical clinic on the same road had been destroyed.

The Dalai Lama, who Chinese authorities blame for orchestrating the protests, described yesterday's visit as a "first step", saying he hoped journalists would be allowed to operate "with complete freedom". He added: "Then you can access the real situation."

The White House said that Mr Bush encouraged Mr Hu to engage in "substantive dialogue" with the exiled opposition leader's representatives and to allow the media and diplomats free access to protest areas.

Earlier Chinese state media announced the surrender of more than 600 people who took part in the protests in Lhasa and in Aba county in Sichuan province, home to ethnic Tibetans. But Beijing appeared to have failed to quell the insurrection completely, with reports from the western province of Qinghai of hundreds of civilians staging a sit-down protest after police stopped a march. Paramilitary forces dispersed between 200 and 300 protesters and ordered people to stay inside.

One source told Reuters: "They were beating up monks, which will only infuriate ordinary people."

The violence has prompted growing international condemnation. The head of the European Parliament, Hans-Gert Pöttering, issued an invitation yesterday to the Dalai Lama to address MEPs and paved the way for a vote on a possible partial boycott of the Olympics.