Philippine troops have killed an Abu Sayyaf commander wanted for kidnapping and attacks on foreign ships, a military official said on Sunday.

Troops were on patrol in waters off Jolo island, 1,000km south of Manila, on Saturday when they clashed with the Abu Sayyaf fighters aboard a wooden boat, Brigadier-General Cirilito Sobejana said.

The group was led by Badong Muktadil, a commander wanted for kidnapping, murder, and attacks on foreign vessels at the maritime border with Malaysia, according to Sobejana, commander of an anti-terrorism task force.

The death of the commander is a major loss for the armed group, Sobejana said.

"The neutralisation of Badong is another big setback on the Abu Sayyaf group, particularly on their kidnapping and terroristic activities," Sobejana was quoted as saying in a local news report.

Among the recent attacks blamed on Muktadil's group was the kidnapping of six crew members from a Vietnamese-flagged cargo ship in February and the killing of one crew member.

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One of the captive crew members from the MV Giang Hai was also killed during a clash between his abductors and troops in Jolo in July. It was not clear if the victim was killed in the crossfire or shot by Abu Sayyaf fighters.

The group is believed to be holding about 20 hostages, including 14 foreigners, on Jolo island and the nearby province of Basilan.

Abu Sayyaf is accused of being allied with the Islamic State of Iraq and the Levant (ISIL, known as ISIS) group.

Isnilon Hapilon, an Abu Sayyaf leader, has been identified as the head of ISIL-allied fighters battling government troops in Marawi City since May 23.