The Islamic State group is trying to establish a stronghold in the violence-racked southern Philippines, the head of the nation's biggest Muslim rebel organisation warned Monday.

Moro Islamic Liberation Front (MILF) chairman Murad Ebrahim said the extremist IS seeks to capitalise on growing frustration over the breakdown of efforts to end a decades-long Muslim separatist rebellion in the southern Mindanao region.

The peace process has been frozen since the Philippine congress failed last month to pass a bill, agreed between the government and the MILF, that would have granted autonomy to the region.

"Now, after the non-passage of the (bill), we are quite concerned that they (the IS) can capitalise on this, because the sentiment of the people in the area is now very strong. The frustrations after the non-passage of the law -- they can capitalise on that," Murad told reporters in Kuala Lumpur.

Gunmen pledging allegiance to the jihadists controlling vast swathes of Iraq and Syria have instigated a series of deadly battles with the army in the volatile southern Philippines since parliament blocked the peace push.

Murad said the MILF was seeking dialogue with IS-allied militants to dissuade them for further attacks.

Violence has plagued the southern Philippines for decades during a Muslim separatist insurgency that has claimed 120,000 lives.

The Philippines is predominantly Catholic.

The MILF signed a peace accord with President Benigno Aquino's government in 2014 to end its struggle for independence, which began in the 1970s. 

Aquino's six-year term ends in June and the MILF has pledged to honour a ceasefire while it awaits Philippine elections at mid-year.

"We cannot completely abandon armed struggle, but we always believe we have to give supremacy, primacy to the peace process because we believe the solution to the problem is still political," Murad said.

"As long as the peace process has a chance to move forward then we don't want to revert to violence again."