Loyal marines have taken positions around the complex

Declaring a nationwide "state of rebellion," Ms Arroyo gave the group of soldiers until 1700 (0900 GMT) to leave the prestigious Glorietta complex in the Makati financial district or be forced out.

The president ordered the military and police "to suppress and quell the rebellion" under special powers given to her by the constitution.

The disaffected soldiers took control of the complex in the early hours of the morning, and ringed it with what appear to be explosives.

They are demanding the resignation of Ms Arroyo and her Defence Minister, Angelo Reyes, accusing the government of corruption.

Your actions are already hovering at the fringes of outright terrorism Arroyo message to mutineers

Residents of an apartment block inside the complex - including Australia's ambassador to the Philippines and other foreign nationals - left the compound early on Sunday after being trapped by the incident.

The rebels - thought to number only a few dozen - said they had only been kept inside until daylight for their own safety.

Correspondents at the scene say the situation is complex, with evidence of mutineers exchanging handshakes with the troops sent to surround them.

The US State Department has expressed its "full support" for President Arroyo - a position echoed by Australia's foreign minister.

"We don't want to see presidents fall out of the barrel of a gun," Alexander Downer said.

'Reasonable force'

In a televised address, Ms Arroyo warned the rebels that her troops would use "reasonable force" to retake the complex and insisted that she remained in full control of affairs.

Analysis: Symptom of malaise In pictures: Manila mutiny

Telling the mutineers that she was their "commander-in-chief", she said:

"You have crossed the line of professionalism and are now engaged in unlawful political action backed by the use of force.

"Your actions are already hovering at the fringes of outright terrorism."

In an earlier speech on TV, she had vowed to track down a group of "rogue" junior officers who had abandoned their posts, taking their weapons with them.

One of the officers on the government's arrest order denied the group was plotting a coup and told reporters outside the complex that the soldiers had only planted explosives as a defence.

"We are not attempting to grab power - we are just trying to express our grievances," said Lieutenant Antonio Trillanes.

"These explosives are set to defend our position. If they try to take us down, we will be forced to use them."

He said the government had put out a "death warrant" against himself and the others to "suppress what we know".

Red armbands displayed by the mutineers feature a sun-symbol flag used in the resistance against Spanish colonial rule.

Armed with rifles, they arrived wearing baseball caps and black backpacks.

Allegations

The group accuses the government of staging terrorist attacks in the Philippines as a means of getting military aid from the US.

The BBC's John McLean in Manila says such allegations have been aired before, but the rebel soldiers have provided no proof for their claims.

The limited number of soldiers involved and the apparent lack of public support for them means that the rebels are more of a nuisance than a threat to the government, he notes.

But our correspondent adds that the incident reinforces the perception that the government is not in a secure position.