Arroyo, in a statement, said her government was working to "build confidence in the peace process and we are preparing for the opening of talks" with the Moro Islamic Liberation Front (MILF), the country's top Muslim separatist group.

"We are open to the suspension of warrants by the court if this is necessary (to) move the peace talks forward," the president said.

The MILF had warned that the rebels would not return to the negotiating table unless the court lifted warrants of arrest against its chief, Salamat Hashim, and other rebel negotiators.

The warrants were slapped against them in connection with deadly bombings in the southern Philippines this year.

"The MILF must not tarry on the procedural issues involved, especially so that it has several lawyers and legal advisers among its ranks," Arroyo said. "We must avoid being bogged down by these matters."

Malaysia, which has been hosting the peace talks, has said it would be difficult to go ahead with the negotiations with the arrest warrants still in effect.

The 12,500-strong MILF has been waging a 25-year rebellion for the establishment of an independent Islamic state in the southern third of this mainly Roman Catholic country.

Peace talks were suspended early this year when Arroyo accused the MILF of harboring terrorists responsible for a spate of attacks in the south, including the bombings of an airport and a wharf in the southern city of Davao that left 38 dead.

The MILF on Monday warned of more hostilities in the south if the negotiations fell through, accusing Manila of insincerity.

A statement posted in the MILF website quoted a senior rebel leader, Gordon Saifullah, as saying that the MILF was prepared to return to war immediately.

"War can resume anytime if the peace talks between the MILF and (Manila) will not resume soon," he said, adding that government had been "dilly-dallying by introducing so many obstacles" to the talks.

Meanwhile, he said the military has continued to conduct raids and attacks on MILF positions in Mindanao, forcing the guerrillas to retaliate.

WAR.WIRE