Seven Philippine soldiers were killed and 21 were wounded. - AFP (File Photo)

ZAMBOANGA, Philippines: Seven Philippine soldiers were killed and 21 were wounded in fierce clashes with al Qaeda-linked Islamic militants in the southern Philippines on Thursday, the military said.

The soldiers encountered members of the Abu Sayyaf group in one of their hideouts in the forests of Jolo Island before dawn, local military spokesman Lieutenant Colonel Randolf Cabangbang told reporters.

“The encounter was fierce and troops encountered a big group of the Abu Sayyaf,” he said, adding extra forces and air support had since been called into the area.

Cabangbang said it appeared the soldiers stumbled into a major Abu Sayyaf camp as they chased a small group of the militants.

“I think what happened was, the troops were on manoeuvres during the entire night, and in the morning that's when they realised they were already in the (Abu Sayyaf) camp.

That explains why we have so many casualties,” he said.

Cabangbang said it was believed the militants were under the control of senior Abu Sayyaf figures wanted for previous kidnappings of Americans and Filipinos in the southern Philippines.

One of those leaders is Isnilon Hapilon, the subject of a dollar 5-million-dollar reward from the US government for information leading to his capture.

Another is Radullan Sahiron, an ageing Abu Sayyaf figure who has a dollar 1-million-dollar bounty on his head and is easily distinguished because he lost his right hand fighting security forces in the 1970s.

However Cabangbang said it was not clear whether Hapilon and Sahiron were directly involved in Thursday's clashes.

He also said the military was not yet able to say if there were any Abu Sayyaf casualties.

The Abu Sayyaf, a small gang of self-styled Islamist militants founded in the 1990s with seed money from Osama bin Laden's al Qaeda network, is blamed for the country's worst terrorist attacks.

These include the bombing of a passenger ferry in Manila Bay in 2004 that killed more than 100 people, as well as a string of high-profile abductions targeting foreigners and locals.

Hundreds of US troops have been deployed on Jolo and other parts of the southern Philippines since 2002 to help eliminate the Abu Sayyaf.

However they are only allowed to train Filipino soldiers, and not engage in any combat operations.

The Philippine and US militaries have described their joint operations in the south as a success, saying the Abu Sayyaf threat has diminished and their militant numbers are down to just a few hundred.

However incidents such as Thursday's clashes show the Abu Sayyaf remains able to conduct deadly operations.

There have also been a string of kidnappings in the south in recent months that authorities suspect have involved the Abu Sayyaf.

The military and police blamed the Abu Sayyaf for kidnapping a Malaysian trader on Jolo in May. The kidnappers have demanded eight million pesos (dollar 185,000) for his release.

The Abu Sayyaf was also blamed for kidnapping an Indian man who was visiting his Filipina wife's hometown on Jolo last month. No ransom demand, if any, has been made public.