Washington's top military officer in Asia-Pacific Admiral Philip Davidson said he hoped Philippine President Rodrigo Duterte's decision to scrap a deal allowing US forces to be based in the country would be rethought.

Manila has given "180 day notice so we have some time for diplomatic efforts," Davidson said at an event in Sydney. "I hope we can get to a successful outcome."

Trump has said he would be "fine" with the end of the visiting forces agreement as it would save the United States "a lot of money".

But Davidson insisted the move would hamper military operations in Duterte's home island of Mindanao -- where separatist and Islamist violence has killed some 100,000 people.

"Our ability to help the Philippines in their counter-violent extremist fight in the south, our ability to train and operate within the Philippines and with Philippines armed forces would be challenged without that visiting forces agreement," he warned.

Though a landmark peace deal with the largest of the rebel groups, the Moro Islamic Liberation Front, was sealed in 2019, the most brutal extremist factions were not included.

Those groups include the Islamic State-aligned BIFF and Abu Sayyaf, a kidnap-for-ransom gang that has been behind some of the nation's deadliest attacks.

In late December at least 17 people -- including soldiers -- were injured in a dual hand grenade and IED attack on the island.

The rotating deployment of US troops in the country -- coupled with a long-standing mutual defence pact and regular military exercises -- is also seen as a bulwark against rising Chinese influence in the region.

Davidson praised the efforts of Indonesia in fending-off Chinese poaching in their waters and called for further cooperation between Pacific nations.

"I'm optimistic that the region is not only waking-up to that aggressive behaviour but, more importantly, beginning to take a stand against," he said.

He warned Australia to be aware of the threat of a Chinese base in the Pacific, which would help project Beijing's influence well beyond its territorial waters.