Arrest warrants issued by Filipino courts against members of the group have been suspended and nine key rebel leaders, including MILF Chairman Hashim Salamat, have been granted 90-day safe conduct passes, government officials said.

MILF, the largest group fighting for the creation of an independent Muslim homeland on the island of Mindanao in the south of the Catholic dominated archipelago, has been battling government forces for more than a three decades.

“Peace is at hand,” Philippines President Gloria Arroyo said in a statement. “Today the peace panels of our government and the MILF have agreed on a mutual cessation of hostilities.”

Terrorist allegations

The guerrillas have been accused of providing training and protection to members of outlawed Jemaah Islamiah, an Islamist group accused of planting the bomb that killed 202 tourists in Bali last year.

They are also accused of links with Osama bin Laden’s al-Qaeda.

The Government suspended rewards offered for the capture of leading members of the MILF, which it claims is responsible for the recent deaths of more than 100 people in the south of the country. 

“The MILF leadership is elated at the lifting of the warrants of arrest and we expect that this would speed up peace talks,” Ghazali Jaafar, deputy chairman of MILF, said in a statement according to Agence France-Presse.

More than 120,000 people, mainly civilians, have died since the outbreak of hostilities between the government and separatist rebels in 1972.

The US government has said it will increase development aid to Mindanao in a bid to promote peace and increase living standards.

The peace talks are largely the result of increased international pressure on the Filipino government to negotiate with the rebels.

US military advisors have been in the country for more than 12 months, training government troops to counter the guerrillas. Their efforts have proved largely ineffective.

Talks are expected to begin in Kaula Lumpur next week.