The Philippines government and the country's largest Muslim rebel group have signed a peace deal which serves as a roadmap to forming a new autonomous region in the south, a step towards ending more than 40 years of conflict.

President Benigno Aquino and Ebrahim Murad, head of the Moro Islamic Liberation Front (MILF), held one-on-one talks before the signing of the landmark framework agreement.

Before the meeting, Mr Murad, a first-time visitor to the presidential palace in Manila, handed Mr Aquino a miniature gong, which he ritually sounded.

"This is the sound of peace," Mr Murad told the president.

It was Mr Murad and Mr Aquino's second meeting since August last year when they held secret talks in Tokyo, a major turning point in the violence-interrupted peace negotiations that have lasted nearly 15 years.

Malaysian prime minister Najib Razak, whose government has facilitated the stop-start negotiations since March 2001, was present at the signing along with foreign dignitaries and international aid agencies that helped in the peace process.

"Much work remains to be done in order to fully reap the fruits of this framework agreement," Mr Aquino said.

"We have commitments to fulfil, people to lead, and dreams to achieve.

"We are committed to enabling our partners to transform themselves to a genuine political party that can help facilitate the region's transition towards a truly peaceful and progressive place."

Mr Aquino is expected to issue an executive order shortly to form a 15-member transition commission that will formulate new legislation by 2015 to create a new Muslim local government for the Bangsamoro, the name given by the Moro tribes for their homeland.

A plebiscite later in Muslim-dominated areas in the south will determine the shape and size of the new Bangsamoro area.

The new autonomous government will have greater political powers and more control over resources, including minerals, oil and natural gas than the existing Muslim-governed entity.

Currency, postal services, defence and foreign policy will remain under the central government in Manila.

Negotiations continue

The agreement did not give details of the power-sharing arrangement between the national government and the Bangsamoro.

But it guarantees rights of both Muslims and non-Muslims, unlike a 2008 deal that was struck down by the Supreme Court as unconstitutional.

"Negotiated political settlement is the most civilised and practical way to solve the Moro problem," Mr Murad said.

"We in the MILF central committee did not waver and vacillate in pursuing it to the end, despite the devastating three all-out wars in 2003 and 2008 waged by previous Philippine regimes."

Hundreds of Muslims, many in a 20-vehicle caravan from Mindanao, gathered on a busy street about 200 metres from the presidential palace to lend support to the peace agreement, shouting "Allahu Akbar".

They also waved banners and held placards which read "Give peace a chance" and "We support lasting peace in Mindanao".

"There's no room for pessimism," Norhaiya Macusang of political group Anak Mindanao, told the crowd.

"We are just at the starting point of a long journey to lasting peace, let's join hands together."

On Sunday, about 200 women wearing the Muslim hijab veil took part in a run for peace with soldiers near the main army base.

Both parties said there were still unresolved issues on the plebiscite to form the new entity, the creation of an internal security force, and other power - and wealth - sharing arrangements.

While there was an initial agreement on laying down of arms by the MILF's guerrilla army, the government said the rebel forces will not be automatically transformed into a local police force.

The rebels also want a more calibrated demobilisation and disarmament of its forces, citing the security situation in the south with an estimated 115,000 unregistered guns in the area, enough to arm the entire national police force.

A small breakaway MILF force, criminal gangs, feuding clans, and Al Qaeda-linked radical Islamic militants are also actively operating in the area, a potential threat to the peace deal.

Reuters