Government troops in the Philippines say they're closing in on separatist rebels, as they try to end a week-long stand-off in the southern port city of Zamboanga.

More than 60 people are reportedly dead, while tens of thousands of people have been displaced by the fighting.

Scores of hostages are still being held by the rebels, who are loyal to a faction of the Moro National Liberation Front, but Philippine military spokesman Brigadier General Domingo Tutaan has told Asia Pacific the number has fallen.

"Before the weekend we had an estimate of 180, but over the weekend and over the calibrated response we have made there has been a lot that have been released, rescued or escaped.

"We still believe they have a little over 100 civillians with them"

He says the military’s response to the stand off has been appropriate, to ensured hostages have not been brought into harms way.

"In view of our rules of engagement we have to really be discerning in order that the civillians would not be caught in any crossfire.

"The civillians are being used as human shields, and that is the reason why when MNLF faction starts firing mortars we have to really make sure our response is so calibrated so these civillians being used as human shields are not harmed.

"Their mortars have been continuously hitting a lot of civillians.

"A few days ago 10 of our Red Cross volunteers were injured in mortar fire, so again we have to be really deliberate in our actions."

Humanitarian group Human Rights Watch is reporting the Philippine army has been using heavy artillery in populated civillian areas.

Brigadier General Tutaan denies this.

"We are not using any 105mm howitzer in this area."

He says the rebels could end the conflict by standing down.

"We believe this stand-off will end definitely if the MNFL faction would lay down their arms and submit themselves to the law, considering the number of people killed and the normal business activity in the city has been hampered for the past week as a result of their actions."