MARAWI/MANILA (Reuters) - An air strike on Islamist rebels holed up in a southern Philippine city has killed 11 government troops, the armed forces said on Thursday, in a major blow for a military struggling to end its biggest internal security crisis in years.

The accident happened on Wednesday when one of two planes bombing rebel positions missed its target in the heart of Marawi City, where ground troops took on pro-Islamic State militants in a tenth day of fierce street battles.

Graphic: tmsnrt.rs/2r3K9Fe

The bombing error came during the first offensive deployment of fixed-wing aircraft in the operation, aimed at flushing out the Islamist gunmen who have defied expectations by clinging on through days of ground assaults and helicopter rocket attacks.

“Sometimes in the fog of war a lot of things could happen. Accidents happen, like this,” Defence Secretary Delfin Lorenzana told a news conference.

“It’s very sad to be hitting our own troops,” he added. “There must be a mistake somewhere, either someone directing from the ground, or the pilot.”

The little-known Maute group has been a fierce enemy of a military with superior firepower and greater troop strength.

The government fears the brazen attack and its resilience could strike a chord with the Islamic State leadership in the Middle East and win its endorsement as its Southeast Asian affiliate.

The deaths of the soldiers takes the number of security force members killed to 39, with 19 civilians and 120 rebel fighters killed in the Marawi battles.

Lorenzana said Saudi, Malaysian, Indonesian, Yemeni and Chechen militants were among eight foreigners killed, in what experts say is a sign the Philippines could become a regional hub for extremism that Manila may not have the capability to contain.

Graphic: tmsnrt.rs/2qVpzH5

An exodus of residents from mainly Muslim Marawi started on May 23, when the Maute rebels ran amok, torching and seizing buildings, capturing police weapons and vehicles, taking hostages, and freeing jailed rebels.

The military added 21 armored vehicles and a third battalion of troops to the operation on Thursday.

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Lorenzana said air strikes might be suspended, describing the rebels as a small force that “cannot hold that long”.

HUMAN SHIELDS

Bombardments by OV-10 light attack aircraft were carried out for over an hour early on Thursday. Troops engaged rebel snipers, as helicopters circled, identifying targets.

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The military said rebels were using women and children as human shields. Ghazali Jaafar, a leader of the Muslim separatist group, the Moro Islamic Liberation Front, appealed to the Maute to free Christians including a Catholic priest, Teresito “Chito” Soganub, being held hostage.

“This is what our religion Islam tells us, please, release him now, immediately,” he said on television.

The standoff is the biggest challenge of Rodrigo Duterte’s 11-month presidency. He fears Islamic State’s “terrible ideology” will spread on Mindanao, an island of 22 million people, and has warned it could become a haven for extremists fleeing Iraq and Syria.

Duterte said the Maute group was being given too much credit, and that the occupation of Marawi was the work of Islamic State, and planned long ago.

“The rebellion in Mindanao, it’s not Maute, it’s purely ISIS,” he said.

The air strikes are targeting locations where the military believes the so-called emir of Islamic State and point man in the Philippines, Isnilon Hapilon, could be hiding.

The capture or killing of Hapilon would be a much-needed boost for the military.

Islamic State flags around Marawi have been spotted by the media. Images have been circulated widely online of smiling fighters dressed in the black attire typical of Islamic State, posing with trophies that include stolen government weapons and armored vehicles hit by rocket-propelled grenades.

A video posted on the website of Islamic State’s Amaq news agency shows mostly young fighters, and the bodies of dead soldiers inside a vehicle. The authenticity could not be independently verified.

Military spokesman Restituto Padilla said the accidental bombing would not deter the government from defeating the militants.

“The risk ... is very much in the heart of every soldier,” he said.

“He knows where we are entering into. But the mission continues.”