Voters have decisively approved an expanded Muslim-led region in the Philippines' south, which is hoped will bring a measure of peace after decades of fighting has killed thousands and mired the area in poverty.

The results, announced on Friday, will begin the process of the Catholic-majority nation's largest rebel group, the Moro Islamic Liberation Front (MILF), laying down its weapons and assuming political power.

Voters, who were expected to back the so-called Bangsamoro (which means Moro nation) region, delivered a convincing result of about 1.7 million in favour and some 254,600 against, according to official results from the Philippines elections commission.

"We are very happy about the overwhelming support of the people," MILF rebel leader Murad Ebrahim told AFP news agency.

"It was a landslide. There's been nothing like this."

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At least 120,000 people have been killed in the rebellion that began in the 1970s and aimed to push the government to grant independence to a Muslim minority concentrated on the southern island of Mindanao.

The new Bangsamoro region will replace and expand on the current autonomous government, which has struggled to govern effectively due to limited powers and has been hamstrung by alleged corruption.

Among the areas covered by the new region is the city of Marawi, which was occupied for six months by armed groups that pledged allegiance to the Islamic State of Iraq and the Levant (ISIL, also known as ISIS) group.

The Muslim-majority island province of Sulu voted against the new proposal, but it was overwhelmed by votes from other provinces. Basilan province's capital city of Isabela also rejected the new region, even as the rest of Basilan approved it.

A handful of smaller areas, which were not included in Monday's referendum due to administrative delays, are set to vote on February 6 on whether to join.

Rebels and the government in Manila hope a new, peaceful Bangsamoro will finally draw the investment needed to pull the region out of the brutal poverty that makes it a hotspot for violence.

As part of the peace process, MILF has joined the government in battling hardline groups such as the Abu Sayyaf and the Maute Brothers, which aligned themselves with ISIL.

Give up their guns

President Rodrigo Duterte, himself from Mindanao, has been a staunch supporter of the Bangsamoro and signed the law last year, paving the way for the vote.

Under the terms of the law which lays out the region's powers, Bangsamoro will get $950m in development funds over the next 10 years, as well as a chunk of the tax revenue generated within its borders and national receipts.

Manila will keep control over the police, but it is hoped close cooperation on security with the Bangsamoro's leaders will help get a handle on the region's endemic lawlessness.

Muslim rebels have long been battling for the independence or autonomy on Mindanao, which they regard as their ancestral homeland dating back to when Arab traders arrived there in the 13th century.

After voters' approval, the rebels are to immediately demobilise a third of their fighters, which the group says number about 30,000.

MILF has begun an inventory of its weapons, which will not be destroyed but rather placed in a depot guarded by former MILF fighters and government security forces.

Laying down their guns may prove to be a delicate process for rebels living in a region with extremely limited rule of law, where being armed is also a way to protect against crime.

Transitioning from rebellion to governance also promises to carry challenges for rebels who have limited experience in the difficulties of politics and bureaucracy.