President Arroyo ruled out immediate peace talks with Muslim separatists in the southern Philippines and said they must first cut their ties to "terrorist" groups.

"Peace talks will resume only under conditions where the safety and security of our communities against terrorism and crime are permanently assured," Arroyo said in a statement Thursday.

"The burden of this assurance lies in the MILF."

The 12,500-member Moro Islamic Liberation Front (MILF) has been observing a temporary unilateral truce in a bid to restart peace talks, but Arroyo has rejected the cease-fire as posturing.

She has demanded the rebels hand over members and officers accused of ordering bombings and raids that left about 100 people dead and hundreds wounded on the island of Mindanao this year.

Arroyo has also demanded that MILF chairman Salamat Hashim be chief negotiator, and she has ordered punitive military strikes against MILF units accused of sheltering "terrorist cells."

The MILF has rejected a direct role for Hashim in the proposed peace talks and has denied training foreign militants of the Jemaah Islamiyah (JI), blamed for a series of bombings in Indonesia including the Bali bombing.

Arroyo said Thursday that if the MILF can "convincingly cut clean from terrorists and criminals, the government is ready to engage in principled negotiations with the assurance of third party facilitators."

Earlier Thursday, the MILF said it was monitoring a military build-up around five towns and a city in Mindanao.

The MILF believes the objective of the operation is to capture Hashim's two top deputies, guerrilla commander Murad Ebrahim and political officer Ghazali Jaafar, a MILF statement said.

"Up to this writing, there have been no skirmishes as both Murad and Jaafar have long anticipated the operation and transferred to other areas," it added.

The armed forces acknowledged on Sunday that police and soldiers raided two houses near the town of Sultan Kudarat but failed to capture Jaafar and Ebrahim.

The MILF said military units have also deployed around the city of Cotabato as well as the towns of Kabuntalan, Datu Odin Sinsuat, Pigkawayan and Midsayap.

The MILF has been waging a 25-year armed campaign to set up an Islamic state in the southern third of the mainly Catholic Philippine islands.
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