The Philippines army says that it has captured a key rebel stronghold as part of a major offensive on the southern island of Mindanao.

Colonel Cardozo Luna, head of the 602nd Infantry Brigade, told the Associated Press that they had captured the village of Kabasalan, saying that the village contained "all the combined elements of darkness".

the solution is to talk, but we can't talk if the atmosphere is not conducive Muhammad Murad, MILF military commander

But a spokesman for the Moro Islamic Liberation Front (MILF) denied that they were on the run, and said that they had simply changed tactics.

Casualty figures are also hotly disputed. The government claims to have killed at least 140 rebel fighters, but rebel spokesman Eid Kabalu told the Associated Press that he had only lost 17 of his men.

The military says the offensive is aimed at flushing out a group of kidnappers known as the Pentagon gang, which is on the list of US terrorist organisations.

Conflicting reports

The BBC correspondent in Manila, John McLean, says it is impossible to verify either the army or the rebel casualty figures.

At least 30,000 local people have been displaced by the fighting, which started on Tuesday when more than 2,000 soldiers attacked the area around Pikit, with tanks, artillery and planes.

The rebels have vowed to continue fighting until government troops withdraw to their original positions.

The army has accused the MILF of sheltering Pentagon members.

But the MILF claim that the army is using the Pentagon gang as an excuse for attacking them so as to gain leverage in peace talks, following a ceasefire agreement signed in 2001.

In a local television interview, Muhammad Murad, the MILF military commander said that "the solution is to talk, but we can't talk if the atmosphere is not conducive".

MILF guerrillas are campaigning for independence for the Muslim minority in the south of the Philippines - a predominantly Christian country.