Manila - The Philippines remained optimistic that a peace accord could be signed with Muslim secessionist rebels in the country's troubled south despite an impasse in negotiations, the government's chief peace negotiator said Monday.

Rodolfo Garcia, head of the Philippine negotiating panel in the talks with the Moro Islamic Liberation Front (MILF), said the impasse could be resolved as early as August with the planned signing of an agreement on the contentious issue of ancestral domain, which deals with the expansion of the current five-province Autonomous Region in Muslim Mindanao.

The 12,000-strong MILF initially wanted to include about 1,000 villages in the existing autonomous region, but Garcia said the government and the MILF peace panels have already reached a consensus on including 800 villages.

"There is a good chance that we can even make the ancestral domain agreement before August," he told a forum at the Foreign Correspondents Association of the Philippines.

Garcia conceded that even with the resolution of the ancestral domain problem, there were still other difficult issues to resolve before a peace agreement could be signed, such as the mode of governance and issues related to exploitation of natural resources.

But he expressed optimism a final agreement could be signed before the term of President Gloria Macapagal Arroyo ends in 2010.

"Hopefully, the ancestral domain agreement would provide that momentum that would overcome the acrimonious debate on many of these specific details and shorten the contentiousness," he said.

"The target still would be that we would be able to have an agreement with the MILF before the term of the president ends," he added.

Garcia admitted that recent political turmoil besetting Arroyo, including accusations of corruption, have slowed down the talks because the government panel had to reassess its position in the peace talks to avoid creating additional controversy.

"Some recent political difficulties brought about by attacks on the government itself impacts on my job," he said. "The ancestral domain agreement is a potentially controversial and explosive agreement, and it is right for the government to make sure that the agreement ... could stand public scrutiny."

Malaysia last week pulled out most of its troops overseeing the implementation of a ceasefire between the government and the MILF. (dpa)