Philippine troops took back ground from Muslim rebels Sunday, the military said, as they tried to end a week-long siege in the southern city of Zamboanga that has seen thousands flee and left more than 60 people dead.

Sporadic clashes continued as soldiers moved to clear Moro National Liberation Front (MNLF) gunmen from coastal neighborhoods and cut off escape routes after a cease-fire plan collapsed.

Military spokesman Lieutenant Colonel Ramon Zagala told AFP a number of MNLF rebels had surrendered Sunday, and some had been captured while trying to escape in civilian clothes.

"We are gaining ground. We've taken back some of the areas from them. We are still moving forward," he said.

As troops moved through the Santa Barbara district, the extent of the damage from seven days of fighting came into full view.

Several buildings were reduced to smoldering heaps while others were pockmarked with bullet holes, an AFP reporter said.

Soldiers recovered the bodies of two slain gunmen still clinging to their rifles and several unexploded warheads for use in rocket propelled grenades that had been left behind by the fleeing rebels.

In a nearby district, a group of soldiers could be seen crouched on the street as sniper fire whizzed just above their heads, television footage showed.

Heavily armed MNLF forces entered the port city's coastal neighborhoods Monday and took dozens of hostages in a bid to scupper peace talks between another militant group and the government aimed at ending a decades-long rebellion in the south.

The fighting was now concentrated only in two coastal districts, while other areas were secure. Police said many hostages were either freed or escaped and the number was now down to only a few from as high as 200 in the early part of the crisis.

But the attack underscored the complexity of ending conflict in the southern third of the mostly Catholic Philippines, where there are several armed Muslim factions and which has seen a proliferation of unlicensed firearms.

Day and night operations by at least 3,000 elite government troops have now seen 51 MNLF rebels killed, as well as six soldiers, a policeman and four civilians.

Air and sea ports remained closed Sunday in a crisis that has paralyzed the city of 1 million, seen entire neighborhoods razed to the ground and forced tens of thousands to flee.

"This is really catastrophic, we're not prepared for this," Zamboanga chamber of commerce president Pedro Rufo Soliven told AFP.

A cease-fire plan brokered by Vice President Jejomar Binay and MNLF leader Nur Misuari was abandoned Saturday after the two sides failed to agree terms.

AFP