Seven soldiers and 20 Muslim rebels were killed in a clash in the southern Philippines, the army said Saturday.

The fighting erupted at dawn Friday when patrolling troops encountered about 80 Moro Islamic Liberation Front (MILF) rebels in Mamasapano town in Maguindanao province, 960 km south of Manila, Lt Col Jonathan Ponce said.

Ponce said five soldiers were wounded in the fighting, which lasted for more than eight hours. 'Scores were also wounded on the enemy side,' he said.

Ponce said more troops have been dispatched to pursue the rebels, who escaped to the mountains in the early evening.

The MILF has been fighting for the establishment of a separate Islamic state in the southern region of Mindanao since 1978.

Peace talks between the MILF and the Philippine government have been suspended since August when the guerrillas launched a series of attacks in Mindanao, triggering fierce fighting with the military.

Nearly 300 people were killed in the attack and subsequent fighting while more than 500,000 civilians were displaced.

The hostilities erupted after the Supreme Court stopped the signing of a territorial agreement between the MILF and the government that would have expanded a Muslim autonomous region in Mindanao.