Police said Rafael Baylosis and another armed man were detained in the capital on Wednesday after a tip-off in a joint operation with military intelligence.

Baylosis headed the Communist Party of the Philippines during the 1980s peak of the insurgency to overthrow a capitalist system that has created one of Asia's biggest rich-poor divides.

Police described the 69-year-old as the "acting secretary" of the Maoist party's guerilla wing, the New People's Army (NPA), which the military says has shrunk to 3,800 members from a high of more than 20,000.

Talks to end the conflict, which the military says has claimed 30,000 lives, were conducted sporadically over three decades.

The military said Baylosis was the first high-profile insurgent arrested since Duterte finally called time in November on efforts to broker a political solution to one of Asia's longest-running struggles.

Officials added he lost his immunity after the breakdown in talks, saying they were executing an arrest warrant for Baylosis over a series of 1985 purges for which he and several other top rebel leaders were charged with murder.

Baylosis pleaded not guilty to the charge in 2016 and was bailed, after which the rebels said he acted as a consultant in the peace talks.

The Communists denounced the arrests Thursday, saying Baylosis enjoyed immunity under the terms of the peace negotiations. They demanded the immediate release of the two men.

Duterte had blamed the NPA for deadly attacks against soldiers and police despite the peace talks. In December he designated the party and its armed wing "terrorist organisations".

The election of the self-declared socialist in 2016 initially revived hopes for successful negotiations as Duterte said it was his "dream" to forge peace in the country.