MANILA, July 18 (Reuters) - The head of the Philippine military demanded on Wednesday that the country's main Muslim rebel group surrender members believed to be behind the beheading of 10 marines last week on a southern island.

General Hermogenes Esperon gave the Moro Islamic Liberation Front (MILF) at least a week to turn over its members who took part in the mutilation of soldiers or face retaliation as another battalion of marines was sent this week to the island of Basilan.

"We have asked them to cooperate and turn over those who were behind the dastardly act of beheading our marines," Esperon told reporters at an army base on the main southern island of Mindanao.

"If they fail, we have a lot of options. We'll start punitive actions against the perpetrators."

Esperon's spokesman, Lieutenant-Colonel Bartolome Bacarro, said the military operations would be intelligence-driven, hitting only those identified as responsible for the beheading of the marines on Basilan.

"Right now, we're pre-positioning our forces," Bacarro said, adding another battalion of 500 marines would be deployed this week on Basilan to beef up 3,000 soldiers already on the ground.

The rebels cautioned the military against taking any sweeping action on Basilan, saying it could jeopardise ongoing efforts to resume peace talks between the largely Catholic central government and the rebels in Malaysia.

"We're reasonable people and we're easy to deal with," said Mohaqher Iqbal, the rebel chief peace negotiator, told reporters by telephone from his hideout on Mindanao island.

"Let's wait for the fact-finding team to finish their jobs. We understand they lost some of their comrades, but the massing of forces on Basilan will not help the peace process."

A tense ceasefire is holding in the south as the two sides allowed a team of Malaysian monitors to investigate the heavy fighting on July 10 in which at least 18 people, including 14 marines, were killed and 16 wounded.

The ceasefire between the military and the MILF, which has been in place since 2003, has been occasionally broken, but last week's fighting was one of the most serious violations.

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