Brigadier General Victor Corpus warned in his resignation letter to President Gloria Arroyo that "the current political crisis is far from over".

"There is still deep restiveness in the officers corps," said Corpus, whose resignation was demanded by rogue soldiers who occupied part of Manila's financial center for more than 20 hours on Sunday.

The rebel soldiers returned to their barracks and agreed to face disciplinary action only after Arroyo promised to look into their allegations of corruption in her government and the military.

They alleged Corpus and Defense Secretary Angelo Reyes staged terror bombings in the south to get more aid from the United States as part of its global anti-terror campaign.

The 59-year-old Corpus denied the allegation, saying it was "without basis."

"In chess, when a queen is beleaguered, it is sometimes necessary to sacrifice a knight to save the game," he said in his letter to Arroyo, copies of which were made public.

"I feel the restiveness (in the military) will not calm with my continued presence," he said. "I think it is best for all that I get out of the picture.

Arroyo called Corpus a "noble" officer, saying he will remain in the armed forces.

Corpus had left his job as a military instructor in early 1970's for several years to join the communist guerilla movement before returning to the fold.

Arroyo promoted him as the military intelligence chief when she came to power in 2001.

Arroyo promised Wednesday that there would be no cover-up in an inquiry she had ordered on the root causes of the mutiny, including rebel soldiers' charges that the military was selling arms to rebel groups and had engaged in terrorist bombings.

"There will be no whitewash or cover-up," Arroyo said in a statement urging anyone with proof of the mutineers' allegations to come forward.

Meanwhile, the country's main Muslim separatist group on Wednesday admitted buying weapons from the military as claimed by the mutineers.

"We understand through our simple inquiry that these firearms come from the (government) arsenal," said Eid Kabalu, spokesman of the Moro Islamic Liberation Front (MILF), which has been waging a guerilla war for the last 25 years.

Kabalu stressed however he was sure there was no collusion between the Muslim rebels and the government and that it was likely that only individual soldiers were selling guns and ammunition to rebels.

"There's no direct links between the MILF and the AFP (Armed Forces of the Philippines). We do buy firearms and ammunition, not necessarily (directly) from the AFP," he said.

Government officials have charged that the mutiny was part of a plot by opposition figures to remove Arroyo.

Arroyo said she wanted to discover why "idealistic and intelligent" young officers could be convinced by "self-serving politicians" to join coup attempts.

A leader of the mutineers, Lieutenant Senior Grade Antonio Trillanes, warned of more destabilization before he was arrested Tuesday.

"Not all of us have been accounted for," he said, warning another incident could "explode on their faces again".

National Security Adviser Roilo Golez charged that a document recovered from the mutineers showed their ultimate aim was to install a 15-man national recovery council "for restructuring society".

Officials say the extensive financing and preparation for the mutiny show there were powerful figures behind the soldiers.

An aide of deposed president Joseph Estrada was earlier arrested after material used by the rebel soldiers was found in his house.

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