MANILA, Sept 6 (Reuters) - Peace talks between the Philippine government and the country's largest Muslim separatist group that were due to resume next week have been delayed yet again, officials said on Thursday.

Negotiations with the Moro Islamic Liberation Front (MILF) to end nearly 40 years of rebellion that has killed 160,000 people and displaced 2 million in the south of the mainly Roman Catholic country have already been stalled for a year.

Talks were due to take place last month but were postponed until September.

"We're still hoping to meet within this month," retired army general Rodolfo Garcia, the government's chief negotiator, told Reuters. "I was told the MILF was prepared to sit down with me even during the fasting month of Ramadan."

Muslims across the globe pray and fast for a month during the Ramadan period starting on Sept. 13.

Manila said informal talks to discuss the thorny issue of the size and wealth of an ancestral homeland for 3 million Muslims in the south were due next week, but the government's peace panel asked for more time to finalise its position.

"I hope I could finish finetuning our position this week," Garcia said, adding he was given full authority by the President to present Manila's new position on the issue of territory.

"We're now talking about expanding the existing Muslim region to include the contiguous villages and towns in the Lanao, Sultan Kudarat and Cotabato provinces on Mindanao."

Mohaqher Iqbal, the rebel chief negotiator, said the MILF was always ready to sit down and listen to the government's proposal, but was worried over Manila's new position on ancestral domain.

The MILF is asking for more territory then the government is willing to give.

"We heard the government was changing again its position on the territory issue," Iqbal told Reuters by telephone from his hideout in the south. "We wanted first to find out if they had changed some of the issues that we had already agreed upon."

Talks, brokered by Malaysia, have been reset four times this year since May when Manila asked for a postponement due to congressional and local elections.

In December 2006, Manila offered to grant Muslims their right of self-determination, allowing them authority to govern a specific area short of an independent and separate state. Manila would retain powers over defence, foreign and monetary policy.

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