New clashes between government troops and Muslim rebels in southern Philippines, killed 13 people, including a 10-year-old girl, on Monday, local officials said.

Six civilians were killed when the motorboat they were riding in was hit by a rocket fired by a government helicopter gunship in a river in Datu Piang town in Maguindanao province, 960 kilometres south of Manila, town administrator Mosib Tan said.

Tan said the victims had boarded the boat to escape an air assault conducted by the military against Moro Islamic Liberation Front (MILF) rebels.

"The boat they were riding in was a total wreck," he said.

Army Colonel Marlou Salazar, who was overseeing the assault, said he was not aware of the civilian casualties but said seven MILF rebels were killed in the attack.

Salazar said the air assault was conducted after the military received information that MILF rebels headed by the right-hand man of Commander Ameril Umbra Kato was present in Tee village.

"We were informed by civilians about the rebels' sightings in the village of Tee," he said. "We have sent soldiers to the area, and it was positive. The enemy also strafed our reconnaissance plane."

Kato is one of two MILF commanders wanted by the government for launching a series of attacks on several towns and villages in the southern region of Mindanao last month, which killed nearly 200 people and displaced more than 500,000 residents.

The military then launched an offensive against the rebels, which the armed forces has refused to halt despite the observance of the Islamic holy month of Ramadan.

The armed forces chief, General Alexander Yano, said the MILF rebels have splintered into smaller groups amid the military's offensive and might shift their strategy to terrorist attacks.

"We have broken them up into smaller formations," he said, "but it is not to say that we have totally or completely decimated their capability to strike because they can resort to other forms of fighting and terrorism and guerrilla actions."

Earlier in the day, an improvised bomb exploded before dawn at the entrance of a public market in Isulan town in Sultan Kudarat province, 960 kilometres south of Manila. No one was injured and police were investigating if the MILF was involved.

Security forces also foiled a bombing in nearby Tacurong City, also in Sultan Kudarat province, after a homemade bomb was recovered near a bakery. The bomb was successfully defused.

The hostilities in Mindanao flared up after a Supreme Court decision to stop government and MILF peace negotiators from signing an agreement that would have expanded an existing Muslim autonomous region in Mindanao.

The Philippine government has already scrapped the agreement on ancestral domain in the wake of the MILF attacks and strong opposition by Catholic officials.

President Gloria Macapagal Arroyo has also dissolved the government peace panel negotiating with the MILF, saying the move would give the talks a fresh start.