Philippines President Gloria Arroyo has ruled out the possibility of a ceasefire as the army vowed to crush the rebels on the island in a few days.
Spokesman Ignacio Bunye said on Saturday in a statement: "Calls for a ceasefire are appreciated, but justice has to be served first. We cannot allow lawless elements to simply walk away from what they have done."
The military announced on Saturday that it was preparing to storm the mountain hideout where hundreds of rebels were holed up after five days of clashes that have left more than 60 dead.
Meanwhile, armed forces vice chief of staff Navy Vice Admiral Ariston delos Reyes said: "We have increased our troops there and we will continue providing additional troops until they are neutralised."The general said more than 2000 troops were closing in on the rebels and were setting up mortar and sniper positions in the area.
About 300 armed men from the Moro National Liberation Front (MNLF) have taken refuge in mountains near the town of Panamao on the southern island of Jolo after their camp was overrun by government forces on Thursday, according to General Agustin Dema-ala.
He said he expected his force to overrun the rebels "in a few days".
Dema-ala said he was confident the rebels, led by MNLF commander Habier Malik, were surrounded and would not be able to slip the military's dragnet.
"As of now, there is no such order for a ceasefire"
Fighting broke out on Monday between MNLF forces and government troops on the island in what rebels say was retaliation for previous operations by the military which killed local civilians, including children.
The wife and two children of an MNLF leader were among the civilians killed, but Dema-ala said they were caught in crossfire during a clash on 1 February that also left two soldiers dead.
The general said the military was taking pains to avoid civilian casualties.
According to military figures the fighting has left 24 soldiers and 40 rebels dead.
The Red Cross in Jolo says three civilians had been wounded in the fighting.
Relief agencies are rushing aid to about 13,000 people who have been displaced by the fighting.
The government says the rebels demand that their leader, Nur Misuari, be moved from a jail in Manila, where he is facing charges of armed rebellion, to a prison on Jolo island.
The Red Cross says at least three
civilians have been killed
Misuari founded the MNLF in the early 1970s to fight for an independent state on the southern island of Mindanao.
A faction split with Misuari in 1978 and led to the formation of the Moro Islamic Liberation Front (MILF).
In 1996 he signed a peace treaty with Manila and later became governor of a Muslim autonomous region in the south.
But in 2001, he led a rebellion against government forces after what Manila says was their refusal to endorse his demands to be appointed governor for a second term.