The government has decided to stop negotiations with the Abu Sayyaf group, adding it would no longer need the help of Malaysian and Libyan mediators, including U.S. consultants, a senior official said.

He added that the government has embarked on an all out war against the abductors of 28 hostages in southern Philippines Basilan island.

At the same time, the government welcomed the group's reported plan to release two Filipino hostages, a sign that more back-door channels have opened up side by side with the government's plan to intensify its military assault in Basilan.

"We will no longer negotiate," said National Security Council head Roilo Golez, adding that Abu Sayyaf spokesman Abu Sabaya had forced the government to the wall. Former president Joseph Estrada did the same after five months of negotiations to end the group's kidnapping spree last year.

"It's hopeless to talk to him," said Spokesperson Rigoberto Tiglao. The Malaysian negotiators, former Senator Sairin Karno and businessman Yussuf Hamdan "have declined to participate in the talks," he added.

They changed their mind after Sabaya announced the beheading of American national Guillermo Sobero. He was kidnapped with 19 others from a resort in Palawan, southwestern Philippines on May 27.

At the same time, they promised to release two Filipino hostages, adding the "good news" came from a Malaysian national who had negotiated with the Abu Sayyaf during the latter's kidnapping spree in Malaysia and Jolo last year.

"We have not received such information ourselves," said Defence Secretary Angelo Reyes when asked to identify the Malaysian national. The latter quoted Abu Sabaya as saying in their recent dialogue over the phone, "I will release two (Filipinos) as a gift to you."

Meanwhile, Reyes and the Philippine Armed Forces Chief of Staff Diomedio Villeneuva joined Basilan Gov. Wahab Akbar and other local leaders at a meeting with the peace and order council in Isabela, Basilan's provincial capital.

Villanueva ordered a more intensified offensive against the group. The combat general led last year's assault against the larger Moro Islamic Liberation Front (MILF) in central Mindanao. A triple alert level was raised in all towns in Basilan. "There is a military build-up in Basilan. Military operation is ongoing in the province," said Southern Command spokesman Army Col. Danilo Servando.

"Close coordination between the military and local residents, and the cooperation and active participation of the civilians would help solve this problem," said Lantawan Mayor Tahira Ismael, who was against the declaration of a state of emergency in Basilan.

Ismael confirmed that 18 Abu Sayyaf members failed to raze the village Atong-Atong because of armed civilian volunteers, composed of members of the Moro National Liberation Front, 30 policemen, 15 civilian volunteers and eight soldiers.

About 250 families in Lantawan have been displaced by the recent clash between the military and the Abu Sayyaf Group, said Ismail, adding five villages were affected by the firefights.

From Barbara Mae Dacanay, Al Jacinto Noralyn Mustafa

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Government calls off talks with Abu Sayyaf