Philippine troops launched an offensive today on Muslim rebels holding at least 20 hostages and President Gloria Macapagal Arroyo said she would not back down until the guerrillas surrendered or were killed.
A spokesman for the Abu Sayyaf rebels told a radio station by telephone that two of the hostages - who included three Americans and 17 Filipinos - had been killed in the fighting and others would be executed if the military continued its attack.
There was no confirmation of the rebel claim but radio reports said at least 12 guerrillas were killed. The military said two soldiers died and over two dozen people, including troops and villagers, were injured.
Thousands of villagers fled the fighting on the mountainous, forested island of Basilan, 900 km (550 miles) south of Manila, as the military used howitzers and rocket-firing helicopter gunships to pin down the rebels.
Ms Arroyo vowed not to back down, as relatives of some of the hostages pleaded for a halt to the offensive, saying more lives would be lost.
Military operations is the only option, she told reporters in an interview.
She said: "We are showing the world we are enforcing the law. That is our response. We are not surrendering to lawless elements. We have a job to do and we are going to do it as best we can."
Asked about possible casualties among the hostages, she said: "I don't think it's wise to be discussing the consequences."
The military said it had no reports that any of the hostages were hurt in the fighting, the first encounter between the guerrillas and soldiers who had been hunting for them over scores of islands since the hostages were seized on an island resort on Sunday.
About 100 guerrillas were involved in the clashes.
Military commanders said the rebels were fleeing with their captives towards a stronghold atop a 567-metre (1,900 foot) mountain. Troops were attempting to keep in contact and sporadic fighting was continuing, one officer said.
Late into the evening, truckloads of soldiers could be seen moving toward the battle zone from other parts of Basilan.