ZAMBOANGA - Heavy fighting erupted Thursday between troops and Islamic militants holding an ailing Italian Red Cross worker hostage, the military said.

Soldiers caught up with about 150 heavily armed Abu Sayyaf members near the town of Indanan on southern Jolo island at dawn, triggering clashes, regional army spokeswoman Lieutenant Steffani Cacho said.

"Fighting is still ongoing," she said. "There are casualties on the government side."

She said no other details could be made public.

There was also no word on the fate of hostage Eugenio Vagni, who has been in Abu Sayyaf captivity since January.

The International Committee of the Red Cross (ICRC) staffer was seized along with a Swiss and Filipina colleague, who were released separately in April.

Interior Secretary Ronaldo Puno last week said Vagni was alive, but said that weeks in the harsh tropical jungle terrain was taking its toll on the 62-year-old.

Vagni was also suffering from a hernia, making it painful for him to move, his freed colleague and intelligence reports have said.

Puno had said that efforts to recover Vagni were being slowed by land mines planted by the Abu Sayyaf.

Foreign militants believed to be from the Jemaah Islamiyah (JI) were also aiding the Abu Sayyaf kidnappers, making it more difficult for negotiators to resolve the crisis peacefully, Puno had said.

The Abu Sayyaf is a small group of Islamic rebels blamed for the country's worst militant attacks.

It once received funding from Osama bin Laden's Al Qaeda network when it was first organised by young Afghan-trained firebrand Abdurajak Abubakar Janjalani, according to local and international intelligence and security groups.

His death in a clash with police in 1998 led to a power vacuum within the Abu Sayyaf, which has since degenerated into a crime gang specialising in kidnappings and bombings.