(Adds displaced farmers returning home)

By Manny Mogato

MANILA, Aug 13 (Reuters) - Tens of thousands of displaced Catholic farmers were returning to their homes in the southern Philippines on Wednesday after troops took control of the area from Muslim rebels following three days of fighting, army officials said. Major-General Armando Cunanan, a military commander in Mindanao, said troops had driven out rebels of the Moro Islamic Liberation Front (MILF) from villages they had occupied in North Cotabato province on Mindanao island.

"Our troops have virtually liberated these areas," Cunanan told reporters, adding the rebels had been forced to move back to the marshlands or deeper into the mountains in adjacent Shariff Kabunsuan province.

"We're sending our bomb disposal teams to make sure all the villages are safe from booby traps and landmines that were left behind by the retreating rebels."

Around 160,000 displaced farmers, clutching cooking pans and a few possession, started walking back to their homes on Wednesday, escorted by dozens of troops backed by armoured vehicles.

"About half of them have returned and we hope that the rest can go back to their homes the day after tomorrow," Defence Secretary Gilberto Teodoro told reporters while touring several temporary shelters in the province.

"PROBLEM, NOT CRISIS"

"It's a problem, but not a humanitarian crisis. As we have seen, the numbers speak for themselves. We only have about 15,000 families remaining and they are slowly going back to their homes. We want to make sure their villages are safe before they return."

The United Nations had earlier said it was concerned about a brewing humanitarian crisis.

The rebels launched their attack last week after the Philippines Supreme Court halted a deal to create a new, larger homeland for Muslims that would give them more autonomy in the impoverished but resource-rich south.

Muslims in the south of the largely Catholic country have been seeking some form of independence for decades in a conflict that has killed more than 120,000 people, but as details of a secretive land deal began emerging last month, Christians took the matter to court.

Mohaqher Iqbal, the MILF chief peace negotiator, said the rebels did not start the hostilities and warned the national police against filing criminal charges against one of their field commanders, Ustadz Ameril Ombra Kato.

"They can bring their complaint to the ceasefire committee because taking him to court might have an adverse impact on the peace process," Iqbal said, adding Kato was not a renegade MILF leader as the army and police were trying to portray him.

Despite this week's violent clash, neither side is talking about a return to all-out war.

Analysts have said both sides were flexing their military muscles after yet another setback in long-running talks to end the near 40-year separatist conflict. (Reporting by Manny Mogato; Additional reporting by Rosemarie Francisco; Writing by Carmel Crimmins; Editing by David FoX)

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