Manila  - Philippine authorities were waiting Sunday for Muslim rebels to free one of three Red Cross hostages on a southern island, after government troops were ordered to pull out from a cordon surrounding the kidnappers.

A leader of the Muslim Abu Sayyaf rebel group promised to free one of the hostages if soldiers, police and militiamen moved away from their encampment in Indanan town on Jolo island, 1,000 kilometres south of Manila.

Abdusakur Tan, governor of Sulu province, which includes Jolo island, said the rebels had been constricted to about 30 square kilometres of area in Indanan with the cordon of government forces around them.

On Saturday, the government ordered the pullout amid threats by the rebels to behead one of the hostages next week if the security forces did not withdraw.

Tan said the withdrawal of troops, which was ongoing Sunday, would give Abu Sayyaf rebels "about 130 square kilometres of space."

"After the pullout, we expect them to respond positively," he said. "We are just crossing our fingers. Whatever it is, we hope we can sit down and perhaps they would want to release all the hostages."

The hostages - Swiss Andreas Notter, Italian Eugenio Vagni and Filipino Mary Jean Lacaba - were abducted on January 15 after visiting the provincial jail on Jolo to oversee a water and sanitation project.

Earlier in the month, clashes erupted between the Abu Sayyaf and Marines circling the kidnappers, killing three government troops and six guerrillas.

Abu Sayyaf leader Albader Parad had threatened to behead one of the hostages if the military continued its offensive or launched a rescue attempt. He also promised to free one of the Red Cross workers if the troops moved away from their encampment.

While the military repositioned its forces, the rebels did not free a hostage and demanded for a larger pullout.

Philippine authorities initially rejected a larger pullout as "impossible" but made a turnaround after the president of the International Committee of the Red Cross issued a personal appeal for the hostages.

The Abu Sayyaf has been blamed for some of the worst terrorist attacks and high-profile kidnappings in the Philippines. In the past, the rebels have beheaded hostages, such as an American tourist in 2001, when the government refused to give in to their demands. (dpa)