An army spokesman, Major Julieto Ando, said guerrillas from the Moro Islamic Liberation Front (MILF) fired rocket-propelled grenades into houses in the predominantly Christian town of M'Lang.

He said soldiers later killed five rebels in a gun battle.

Guide to Philippines conflict

MILF spokesman Eid Kabalu admitted attacking the town, but said the target had been a military detachment and that civilians might have been caught in crossfire.

The renewed violence came as government negotiators left Manila to try and revive peace talks with the MILF.

The 12,500-strong group has fought a 25-year campaign for an Islamic state in the southern third of the largely Christian Philippines.

Lito Pinol, vice mayor of M'Lang, said three of the dead villagers were shot while sleeping in their mosquito nets.

"This is exactly the opposite of what MILF leaders are saying all along: that civilians will be spared in their fight against the government," he said.

The attack followed an ambush by suspected MILF rebels on Tuesday on a food truck, in nearby Carmen town. Two men driving the vehicle were killed, the military said.

Peace talks

Both incidents took place near the town on Pikit, where government troops took control of a key rebel stronghold in February.

The raid prompted a series of bloody retaliatory attacks by the rebels on civilian targets, and led to a breakdown of peace talks, which government negotiators hope can be resuscitated in talks with the rebels this week.

On Wednesday, four Philippine officials left for Malaysia, which is hosting the talks. They are scheduled to return on Saturday.

President Gloria Arroyo's spokesman Ignacio Bunye said that the talks "have no agenda. We just want to check the atmosphere for discussions. This will be free-wheeling and purely exploratory and we will see what we can talk about".