A Philippine town mayor says more than 30 police commandos have been killed in a clash with Muslim rebels while hunting a top terror suspect in the south.

It was the biggest single-day combat loss for Philippine forces in many years.

Mayor Tahirudin Benzar Ampatuan of Mamasapano town told The Associated Press by telephone that dozens of police special action force members entered the village of Tukanalipao in Mamasapano town at dawn Sunday to capture a notorious bombing suspect but had a "mis-encounter" with members of the Moro Islamic Liberation Front, which signed a peace deal with the government last year.

Ampatuan says some villagers entered the scene of the battle after the fighting subsided and retrieved at least five of the dead.