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Seven Muslim separatist rebels were killed Tuesday in a military assault on a rebel-held area in the southern Philippine island of Mindanao, the military said.

OV-10 bomber aircraft, MG-520 helicopters and 105 mm howitzers blasted positions of the insurgent Moro Islamic Liberation Front (MILF) near the town of Pikit, officials said.

Fighting began at dawn when the 1,000-member MILF force attempted to break out of a ring of ground troops, army spokesman Major Julieto Ando said.

Seven MILF guerrillas were slain and five soldiers were wounded in scattered clashes, Ando said, adding that three rocket-propelled grenades and a rifle had been recovered from the rebels.

About 22,000 villagers have fled the area since Saturday and were taking refuge in schools and churches, said Father Bert Layson, a Roman Catholic priest in Pikit.

The MILF had previously accused the government of provoking the confrontation in Pikit to pressure the rebels into accepting a settlement to the 25 year-old rebellion.

About 12,500 MILF guerrillas operate on the mainly Muslim western half of Mindanao.

The military has been occupying strategic points around Pikit this week in pursuit of a kidnap gang that is allegedly being shielded by the MILF in the Liguasan Marsh, a swampy area and known MILF enclave.

On Monday, MILF gunmen ambushed a unit of army engineers near the southern town of Matanog, killing one soldier and wounding seven others.

MILF spokesman Eid Kabalu denied the rebels instigated the fighting. The military began shelling MILF positions shortly after breakfast and immediately moved ground troops, he added.

While the MILF leadership would still engage Manila in peace talks, Kabalu warned: "We will not allow this (military assault) to win."

"We are on a defensive position. There is continuous fighting, instigated by the government," Kabalu told AFP, adding there were no "criminal elements" in the rebel-held areas.

"There is a ceasefire agreement and they should have followed a process followed by the military. They should not have mobilized a troop batallion there," he said.

Jesus Dureza, an adviser of President Gloria Arroyo, said that members of the joint government-MILF ceasefire committee would meet in Cotabato on Wednesday to discuss ways to halt the fighting. 

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