Government and rebel negotiators yesterday hailed a "breakthrough" in efforts to end a decades-old Muslim separatist rebellion in the southern Philippines.

A joint statement at the end of a three-day meeting in the Malaysian town of Port Dickson between delegations from Manila and the Moro Islamic Liberation Front (MILF) said formal peace negotiations were expected to begin within months.

Both sides "hailed the outcome of the meeting as a breakthrough towards a just and durable solution to the Mindanao conflict," the statement said.

The MILF has been demanding that it be granted rights over its "ancestral domain" or homeland which traditionally means the entire southern island of Mindanao, where they are fighting to establish an independent Islamic state.

But MILF officials have said that they were willing to compromise on the demand, without saying what they were prepared to accept.

"Since the inception of the peace process in January 1997, the Port Dickson talks marked the first time that both sides entered into substantive discussions outside the cessation of hostilities," the statement said.

"The panel decided to forge on with technical level talks in Malaysia to exhaust all possible consensus points before the start of formal negotiations expected to be held by mid-year."

Commitment

President Gloria Arroyo's chief negotiator Silvestre Afable told a news conference that "the past three days have been very productive exploratory talks. This is truly a breakthrough.

"This could not happen without the commitment of both sides and the sincerity shown by the MILF. President Arroyo is very happy with the development. We informed her that we have broken ground."

The leader of the MILF delegation, Mohagher Iqbal, told the news conference: "It was very fruitful negotiations. I suppose if we can fully harness this issue then we will be able to find a negotiated political settlement in Mindanao."

Iqbal was referring to the "ancestral domain" issue, which was the focus of the talks.

Asked for details of the breakthrough, Afable said: "I cannot go into details but in the area of concept, territory and resources we have some detailed consensus.

"We have breached more than 60 or 70 percent of issues in the area of ancestral domain. This gives us much confidence to move ahead. The issue of governance is reserved for the next round of negotiations."

Asked when a peace agreement might be signed, he replied: "There is confidence on both sides but we do not want to state any deadlines."

Both sides said a recent outbreak of hostilities in Mindanao, where a ceasefire has been in place since 2003, would not derail the talks and that they would "strive to resolve all outstanding ceasefire issues."

Limited autonomy

The 12,000-strong MILF has been waging a separatist rebellion since 1978, when it split from the larger Moro National Liberation Front (MNLF). The MNLF signed a peace deal with Manila in 1996 and settled for limited autonomy.

The MILF was left out of that deal and MNLF leaders later became officials of what is now known as the Autonomous Region in Muslim Mindanao (ARMM), comprising several provinces and cities that are mostly Muslim populated.

The MILF leadership had earlier said that the ARMM was a failure, because the region remains mired in extreme poverty and that the nature of its framework left it open to abuse and graft.

More than 100,000 people are estimated to have died in the conflict in the past 27 years.