Manila  - Philippine President Gloria Macapagal Arroyo on Wednesday called for the resumption of stalled peace talks with the country's largest Muslim separatist rebel group.

Arroyo said the government has drafted a new proposed agreement with the Moro Islamic Liberation Front (MILF) on the contentious issue of ancestral domain, which covers the establishment of a Muslim homeland in the southern region of Mindanao.

"I now direct our negotiators to present our government position to the MILF so we can quickly resume the stalled negotiations and hasten the signing of a peace agreement with the MILF," she said.

An agreement on ancestral domain would allow the two sides to discuss other components of a comprehensive peace pact, such as disarmament and governance.

Arroyo stressed that a peace agreement would help bring "sustainable peace and development not only in Mindanao but to the country as a whole."

Peace talks between the MILF and the Philippine government have been suspended since December over disagreements over how to set up the proposed Muslim homeland.

The contentious points include the number of villages to be included in the entity as well as its fiscal and political independence.

Executive Secretary Eduardo Ermita said the new draft agreement on ancestral domain would assure the MILF that "their aspirations, as they appear in the agreement, shall be accomplished after the agreement."

"Even our constitution shall be amended to address the desires as contained in that agreement," he added without giving details on the proposal.

Ermita said he hoped the MILF would be "enlightened" with the new proposed agreement and agree to resume the peace talks.

The MILF had wanted to include more villages in the proposed Muslim homeland than what the government was willing to agree to. It had also insisted on the entity's fiscal and political independence.

The 12,000-strong rebel group has been fighting for the establishment of an independent Islamic state in Mindanao since 1978. (dpa)