Aside from the hostages, the rebels have reportedly detonated bombs to set dozens of houses on fire to slow the troops' advance. In rebel-held Santa Catalina village, an AP photographer witnessed how troops advanced behind armored carriers to retake a road stretch only to be stalled by rebel fire, clusters of burning houses and apparent hostages yelling, "Don't fire, don't fire."
Several hostages have escaped but it remained unclear how many remained in rebel custody.
President Benigno Aquino III said more firefights were expected but assured more than 62,000 displaced villagers being sheltered at a sports complex in Zamboanga city that the rebels' capability to sow trouble has been degraded and the government was working to end the crisis soon.
Although the fighting has been contained in just three coastal villages by Saturday, Roxas said the danger to the trading city of nearly a million people remained serious and its international airport would have to remain closed, along with the main seaport.
A military helicopter securing Aquino was fired upon in the city Saturday, Roxas told a news conference without giving other details.
The hostage standoff, the most serious security crisis Aquino has faced since rising to power in 2010, unraveled Monday when troops foiled an attempt by the rebels, who arrived by boat from outlying island strongholds, to march and hoist their flag at Zamboanga's city hall. They barged into five coastal villages and took more than 100 hostages as human shields.
The Moro insurgents, led by rebel leader Nur Misuari, signed a peace deal in 1996, but the guerrillas did not lay down their arms and later accused the government of reneging on a promise to develop long-neglected Muslim regions in the south of the predominantly Roman Catholic nation. The government says Misuari kept on stalling and making new demands.
The rebels have become increasingly restive in recent months as they were overshadowed by a rival rebel group, which have engaged Aquino's government in peace talks brokered by Malaysia. The talks have steadily progressed toward a new and potentially larger autonomy deal for minority Muslims in the south.
Misuari has not been seen in public since the standoff began.
Vice President Jejomar Binay said Misuari agreed to a truce late Friday by telephone, and he relayed the news to Defense Secretary Voltaire Gazmin, who has been helping deal with the crisis in Zamboanga city. Binay flew to Zamboanga Saturday to help deal with the crisis.
But Gazmin said the rebels have continued to fire in violation of the agreement.
"Everybody wants peace, to stop this without more bloodshed," Gazmin told DZBB radio network. "But as we speak, there's firing so there's no cease-fire. We agreed that government forces will not fire only if the MNLF will not open fire."
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Associated Press writers Jim Gomez, Hrvoje Hranjski and Teresa Cerojano contributed to this report from Manila.