He delivered his words after handing a symbolic copy of the new law, which he signed last month, to the leader of the country's largest Muslim rebel group.

It was the culmination of a ceremony at the presidential palace in Manila marking the passage of legislation that is a key step to ending one of Asia's longest and deadliest conflicts.

The measure has been a crucial missing element to a languishing peace pact with the Moro Islamic Liberation Front (MILF) which, along with other groups, has waged a rebellion that has claimed about 150,000 lives in the Mindanao region since the 1970s.

"I hope (the law) will finally end the decades-old conflict that is rooted in the Bangsamoro's fight for self-determination and the recognition of their unique identity," Duterte said, referencing the region where much of the conflict has raged.

"May this serve as the final trajectory for the attainment of genuine peace, stability (and) good governance in Muslim Mindanao," he added. "Let us work together as we continue the healing and reconciliation process."

The law enforces a historic but fragile 2014 peace deal where the MILF vowed to give up its quest for an independent homeland and lay down its fighters' weapons in return for self-rule.

Both sides believe creating the area will head off the lure of violent extremism and draw investments to a region where brutal poverty and perennial bloodshed has spawned radical armed groups.

The initial peace accord was signed under Duterte's predecessor, Benigno Aquino, but Congress then refused to pass the supporting law.

Rebel factions and jihadists began pledging allegiance to the Islamic State group soon afterwards and last year attacked the southern city of Marawi sparking a five-month battle that killed 1,200 people and levelled much of the town.

Muslim rebels regard Mindanao, the southern third of the archipelago, as their ancestral homeland dating back to when Arabic traders arrived there in the 13th century.

In 1996, another major rebel group, the Moro National Liberation Front, signed a peace deal with the government that created a Muslim autonomous area in the south.

But critics, including the MILF, said it had failed to bring peace and development.

Under the law Duterte signed, a new political entity known as the Bangsamoro would replace the current autonomous region, gaining more power and resources.

It would keep 75 percent of taxes collected in the area as well as receive an annual fund allocation worth five percent of national revenues, or about 60 billion pesos ($1.12 million).

The region is also to have a parliament and Islamic shariah courts exclusively for cases involving Muslims.

Under the 2014 peace deal, the law has to be approved in a regional referendum, which is widely expected to pass.