A Philippine court on Tuesday offered a plea bargain to a US marine accused of murdering a transgender Filipina, according to lawyers, in a case that has strained Philippine-US ties.

This would give the detained marine, Lance Corporal Joseph Pemberton, a chance to avoid a murder trial that could land him in prison for 40 years if convicted, a state prosecutor and lawyers for the victim's family said.

Pemberton, aged 19 at the time of the killing, had previously asked the court through his lawyers to downgrade the murder charge to homicide, which carries a maximum 20-year prison term.

Lawyers for Pemberton could not be reached for comment on Tuesday's court proceeding, which was off limits to the press.

Prosecutors and lawyers for the family of the victim, Jennifer Laude, as well as Pemberton's defence team, were summoned to a hearing in the northern port of Olongapo to discuss the plea bargain process.

The victim's family said they would not oppose the plea bargain as long as Pemberton served jail time.

"From the beginning until now, that's what we want: to see him in jail for what he did to my child," the victim's mother Julita Laude told AFP.

Prosecutors allege Pemberton met Laude in Olongapo shortly after the US marine took part in joint military exercises in the Philippines.

Laude, a 26-year-old also known as Jeffrey, was found dead on October 12 last year in a cheap hotel in Olongapo's red light district shortly after checking in with Pemberton.

Prosecutors have described an unprovoked and relentless attack against Laude, whose head was plunged into a toilet until she died.

One option that the American could consider is to agree to pay damages and plead guilty to a lesser charge, Olongapo chief prosecutor Emilie Fe de los Santos told AFP.

"They (Pemberton and the Philippine state prosecutors) have to agree on all points. After that, we'll inform the court. But today there was no offer" agreed to by both parties, de los Santos said, outlining the court's instructions.

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"There is no final agreement.... As of now, the charge is still murder," Virgie Suarez, a lawyer for the victim's family told AFP.

If the parties fail to agree, the murder trial will proceed and the court will order prosecutors to start presenting their evidence and witnesses on March 23, the lawyers said.

Legal observers say that theoretically, a plea bargain would help resolve the case within a one-year period set under a joint US-Philippine defence agreement for US servicemen accused of committing crimes in the Philippines.

Pemberton is currently under US military guard at a Philippine military base in Manila, the US government having refused to hand over custody to Philippine authorities.

Security was tight at the courtroom Tuesday, with only lawyers, legal staff, US embassy representatives and the family of the victim allowed inside.

Philippine police stood guard as anti-US demonstrators staged a rally outside the courthouse demanding Pemberton be transferred to Philippine custody.

The US military has had an enduring presence in its former colony since the Philippines gained independence in 1946.

Military exercises involving thousands of US soldiers take place each year, with a new agreement signed a year ago allowing a greater US troop presence in the country -- part of US President Barack Obama's so-called pivot to Asia.

Philippine President Benigno Aquino had courted a greater US presence in an effort to counter perceived rising Chinese aggression in a long-running territorial dispute in the South China Sea.