The Philippines maintained a hardline stance against Muslim guerrillas who have threatened to behead three Americans today if Manila failed to grant their demands.
President Gloria Arroyo reiterated that her government would not negotiate a ransom with Abu Sayyaf gunmen holding a couple from Kansas and a Californian among 15 hostages in southern Basilan island.
But she said that government designated negotiator Mr William Castillo would continue to press for the unconditional release of all the captives.
"These negotiations are part of the military operations because this time we want to do it by the book," Ms Arroyo said, adding that paying ransom could only help the Abu Sayyaf "modernize" their weapons.
The Abu Sayyaf earlier gave Manila 72 hours from Thursday afternoon to halt an army offensive and bring in former Malaysian senator Mr Sairin Karno and businessman Mr Yusuf Hamdan as mediators.
The duo last year helped the government negotiate with the Abu Sayyaf in a similar hostages crisis involving dozens of foreigners and locals, during which huge ransoms were reportedly paid.
They warned that if the demands were not met they would start executing the Americans - missionary couple Mr Martin and Ms Gracia Burnham of Kansas and Californian Mr Guillermo Sobrero.
Security officials said the government was still studying the rebel's demands for the two Malaysians although National Security Adviser Mr Roilo Golez said "it is not very clear" how the Malaysians could help and why the Abu Sayyaf were asking for them.
The three Americans were among 20 people seized by the Abu Sayyaf from a Philippine resort last month and taken to southern Basilan island.
Nine of the hostages escaped during fighting between troops and the rebels, while two others were executed. The gunmen snatched another four hostages from a hospital compound as they escaped from the assault last week.
AFP