In an open letter to the Philippines' influential Roman Catholic bishops, Arroyo said on Tuesday that public mistrust in government was rampant.
But despite the growing number of opposition leaders, allies-turned-critics and civic groups calling for her resignation, Arroyo indicated that the solid turnout for a rally supporting her had helped provide "a more balanced view" of the public's opinion on her leadership.
"On the matter of moral accountability and the need to restore trust, I have initiated the creation of a commission or similar body to look into the truth behind issues recently raised against me," Arroyo said in the letter, read on national television by spokesman Ignacio Bunye.
A truth commission was one of the options that the bishops had outlined on 10 July that took a middle ground on Arroyo's worst crisis.
The bishops had stopped short of calling on her to resign but said she should not ignore the issues being raised and should look inside her heart for the right decision.
Archbishop Oscar Cruz said the commission's parameters were critical – "who will be sitting there and what authority, what powers the truth commission has".
He hoped the commission would have the authority to "pass judgment and execute it without going to submit it to impeachment or whatever".
Arroyo believes she made the
right decision to stay in office
Arroyo said that staying on was the right decision.
"On the matter of effective governance, I took to heart the admonition to discern deeply as to whether the erosion of trust is so severe as to be irreversible," the 58-year-old US-trained economist said.
"I believe that subsequent events and revelations may have given a more balanced view to this question and that my decision to stay in my office is the correct one."
Arroyo said that quitting, when she has not been charged with any wrongdoing, would undercut the country's fragile democracy.
"If we allow our country's president to be pressured to resign under these circumstances, when the issues raised might be speculative ... then we expose our already-weakened political system, a system that needs fundamental reform, to the possibility of never-ending political crisis of a similar nature in the future," she said.
Typical of her combative nature, Arroyo pointed out that allegations of vote rigging were raised during and after the count for the May 2004 vote, which international observers said was generally fair.
She suggested that her opponents were just trying to destabilise her government.
"Accepting the principle of accountability, it may be noted that such issues were raised at a time and in a manner that seems to give credence to the observation that various groups may be manipulating situations for their own agenda, perhaps with the aim of grabbing power," Arroyo said.
"I am hopeful that the process of searching for the truth will shed light on these disturbing matters as well."