Manila - Australia announced Monday a 12-million-peso (255,863-US dollar) grant of humanitarian assistance to thousands of people affected by fighting between Muslim separatist rebels and the military in the southern Philippines.

Australian Ambassador to the Philippines Rod Smith said the fund would help address the needs of people "uprooted from their homes and separated from their means of livelihood" because of the ongoing conflict in the southern region of Mindanao.

"Assistance will include essential items like water and sanitation facilities, food and counseling services in evacuation centers," he said.

"Australia hopes that people displaced by the conflict are able to return home as soon as possible, and the efforts of the government, donors and NGOs can resume the focus on peace-building and development," Smith added.

More than 500,000 people have been displaced by the hostilities in Mindanao since August, when Moro Islamic Liberation Front (MILF) rebels launched a series of deadly attacks mostly in the provinces of North Cotabato and Lanao del Norte.

More than 200 people, including nearly 70 civilians, have also been killed in the attacks and subsequent fighting.

The military has launched an offensive against the MILF to hunt down at least two rebel commanders who led the attacks.

The MILF, the largest Muslim rebel group fighting for an independent Islamic state in Mindanao, was set to sign a territorial agreement with the government in August when the Supreme Court blocked the deal due to questions over its constitutionality.

The setback triggered the outbreak of violence in Mindanao.

President Gloria Macapagal Arroyo has already scrapped the deal and dissolved the government's peace negotiating panel due to the fighting. She has ruled out an immediate resumption of peace talks with the MILF. (dpa)