Philippine soldiers battled a group of about 120 Muslim rebels linked to Islamic State in a ten-hour assault on a southern island that killed 23 people, an army spokesman said on Sunday.

Major Filemon Tan said the military attacked a stronghold of Abu Sayyaf rebels on the island of Basilan led by Isnilon Hapilon, an insurgent for whom the US State Department has offered a bounty of up to $5 million.

"I can confirm 18 soldiers were killed and 53 were wounded," Tan said, adding that five militants, including a Moroccan, Mohammad Khattab, and Ubaida, a son of Hapilon, were killed in Saturday's incident, which wounded 20 rebels.

There was no immediate statement from the small but violent Abu Sayyaf group, which is known for extortion, kidnappings, beheadings and bombings, and is one of the brutal Muslim rebel factions in the south of the largely Christian Philippines.

The group has posted videos on social media sites pledging allegiance to Islamic State militants in Iraq and Syria, which have attracted foreign fighters from Southeast Asia, the Middle East and North Africa to the troubled Philippine south.

The army has stepped up its offensive against the rebels since November, Tan said, when President Benigno Aquino ordered it to hunt down Abu Sayyaf over the kidnapping and execution of foreign nationals.

On the nearby island of Jolo, the rebels on Friday released an Italian man from six months of captivity. Troops were also on alert as another Abu Sayyaf faction threatened to execute two Canadians and a Norwegian tourists after a ransom deadline expired.

In March 2014, the government signed a peace deal with the largest Muslim rebel group, the Moro Islamic Liberation Front, promising to grant autonomy in the south and ending a 45-year conflict that killed 120,000 people and displaced 2 million.