Officials said they had no information on the last remaining hostage, Eugenio Vagni, an Italian, still thought to be held by Abu Sayyaf.

Notter and Vagni, both employees of the International Committee of the Red Cross (ICRC), were kidnapped along with Mary Jean Lacaba, a Filipina engineer, on January 15 while on a visit to an ICRC water-sanitation project at a provincial jail.

Lacaba was released on April 2 and recovered by Philippines authorities in a remote village on Jolo after her captors told them where to find her.

'Exchange of fire'

Gwen Pang, the secretary-general of the Philippines Red Cross, told Al Jazeera that Notter is expected to be brought to the capital, Manila, later on Saturday.

She said the Red Cross received information on Friday that there was an operation in Jolo, including an exchange of fire.

"There was no negotiation as far as we know."

Pang said the ICRC is still "very much concerned" about the health of Vagni, and will continue to work with authorities to ensure his safe release.

Abu Sayyaf, which is alleged to have al-Qaeda links, had earlier said it would behead one of the ICRC workers if Philippine troops did not retreat from Jolo.

The military made a partial withdrawal from five towns.

Abu Sayyaf has beheaded hostages in the past, including an American in 2001 and seven Filipinos in 2007.

The US government has placed the group, which is believed to have about 400 fighters, on its list of so-called "terrorist" organisations.