MANILA, Aug 28 (Reuters) - International peace monitors overseeing a truce between the Philippines and the country's largest Muslim rebel group will extend operations to two southern islands where there has been heavy fighting in recent weeks.

The Philippine government and the Moro Islamic Liberation Front (MILF) agreed at a meeting to allow the peace monitors, who are mainly from Malaysia, to cover the islands of Basilan and Jolo, off the Mindanao mainland, both sides said on Tuesday.

The meeting was held near Kuala Lumpur in Malaysia on Monday.

About 100 people have been killed on Jolo and Basilan in fighting between Muslim rebels and troops since mid-July. The government insists the soldiers are fighting members of the Abu Sayyaf, a small radical group linked to al Qaeda.

But both the MILF and the Moro National Liberation Front (MNLF), an older group that signed a peace deal with the government in 1996, have said their cadres were involved and have accused the military of provocation.

Because of deep clan loyalties on Jolo and Basilan, lines between different rebel groups are often blurred.

Rebel spokesman Eid Kabalu said the government and MILF delegations met only for one day and discussed only the continued deployment of the peace monitors in conflict areas in the southern Philippines, recognising the Malaysian role in "sustaining the gains of the peace process".

Formal peace talks between the two sides have been stalled since September last year.

Last week, the government requested Kuala Lumpur to reset a new round of talks scheduled on Aug. 22 because it was not ready to offer the rebels a new political deal to end nearly 40 years of conflict that has killed more than 120,000 people.

Rodolfo Garcia, the government's chief negotiator, said the talks were likely to resume before the start of the Muslim fasting month of Ramadan next month.

The 60-member peace monitoring team includes soldiers and officials from Malaysia, Brunei, Libya and Japan. The latest agreement also extends its operations for another 12 months.

In the latest fighting on Basilan, the army said it was raining mortar shells on two known Abu Sayyaf positions as hundreds of marines and army commandos prepare to launch a ground assault.

"We are doing our best to seal off all their possible escape routes," an army spokesman, Captain Beil Estrella, told reporters, adding the offensive was not directed against the MILF.

There was no word of any casualties.

AlertNet news is provided by