President Gloria Arroyo is to call for changes to the Philippines constitution to resolve a major obstacle that has threatened to derail peace talks with Moro Islamic Liberation Front (MILF), a senior aide said Wednesday.

The Filipino leader is to ask Congress and the electorate to approve a shift from a centralized form of government in favor of a "federal" system to accommodate Moro Islamic Liberation Front calls for a regional government in parts of the south, Jesus Dureza said.

Dureza, Arroyo's chief adviser on peace negotiations with the country's communist as well as Muslim groups, said her cabinet agreed on December 18 "that this is the way forward" after talks with the MILF broke down.

He told the Foreign Correspondents Association that the initiative would allow the setting up of a MILF-proposed "Bangsa Moro (Muslim Nation) Juridical Entity" to exercise key powers over the area excluding defense and foreign relations.

The electorate of the mainly Roman Catholic Philippines in 1987 ratified a new constitution that set up limited Muslim self-rule in several provinces of the southern region of Mindanao.

Nine years later the government signed a peace treaty with another Muslim group, the Moro National Liberation Front, that went on to run the so-called Autonomous Region in Muslim Mindanao (ARMM).

However the MILF has rejected the ARMM and demanded wider powers over a larger area.

Decades of fighting has left tens of thousands dead as well as large parts of Mindanao mired in poverty.

Christian migrants that now comprise the majority in Mindanao have rejected proposals to expand the ARMM.

Previous government efforts to change the constitution have proved unpopular in the past due to suspicion that the sitting president would use it to change a provision that limits the presidency to a single six-year term.

Dureza said the idea of a federal set-up was popular in Mindanao, where there is a perception by many that the national government has neglected the region.

He said the Arroyo government was hopeful that if the electorate were convinced a federal set-up would solve the Muslim “insurgency”, "they will give it to us."

He said the government has yet to decide whether to ask the Senate and the House of Representatives to convene a constituent assembly to amend the constitution, or to call on Filipinos to elect delegates to a constitutional convention. He also declined to discuss a timetable.

The peace talks, hosted by Kuala Lumpur, broke down last month with the MILF aborting a planned December 15 meeting to draft a peace accord for signing in early 2008.

The Muslim groups want greater Muslim control over the economic resources of the Muslim homeland in the Philippines, a former Spanish and US colony.

Under the constitution, the exploration, utilization and development of natural resources shall be "under the full control" of the state.

Both sides reached a breakthrough in November when they agreed to the scope and boundaries of the MILF's demand for "ancestral domain" or communal land that Muslims lost when the colonial government introduced a system of land titles.