The militants had killed at least 19 civilians, while 20 security forces and 65 gunmen had died, according to the military.
The militants had killed at least 19 civilians, while 20 security forces and 65 gunmen had died, according to the military.
Teenage ISIS fighters are said to be shooting people dead for failing to quote the Koran in a besieged Philippines city.
As 50,000 people fled the city of Marawi in the south of the country, some reported the terror they had left behind.
Terrified residents reported young jihadis taking orders from commanders in their early 20s to force people to recite verses of the Islamic scripture, but when they failed, they would be shot dead to a chorus of laughter.
Government troops take positions as fighting with Muslim militants in Marawi city enters its second week.
Philippine authorities on Tuesday warned Islamist militants occupying parts of a southern city to surrender or die, as attack helicopters pounded the gunmen's strongholds where up to 2,000 residents are still feared trapped.
More than 100 people have been confirmed killed in the conflict, which began last week when gunmen waving black flags of the Islamic State (IS) group rampaged through the mostly Muslim-populated city of Marawi.
Tens of thousands managed to flee and one woman told The Telegraph her decision to leave was sealed when she witnessed teenage jihadis laughing at innocent people being shot.
President Rodrigo Duterte declared martial law across the entire southern region of Mindanao, home to roughly 20 million people, in response to the crisis as he warned that local militant groups were uniting behind IS and becoming a major security threat.
But the militants, initially estimated by the nation's defence chief to number just 100, have withstood eight days of intense air assaults and street-to-street combat, prompting the government's threats on Tuesday.
'We call on the remaining terrorists to surrender while there is an opportunity,' military spokesman Brigadier-General Restituto Padilla said in a statement.
'For the terrorists, not surrendering will mean their sure death.'
Padilla also said the surrender call warning was aimed at limiting the loss of more lives and property.
Up to 2,000 residents were trapped in areas held by the militants, according to the local government, and the International Committee of the Red Cross had voiced alarm they would be caught in the bombing raids or crossfire.
The militants also took a priest and up to 14 other people hostage at the start of the crisis, and their fate remains unknown.
The militants released a video in which they threatened to kill the hostages, according to a report by the SITE Intelligence Group on Monday that could not be verified.
And clashes on Tuesday appeared to be as intense as previous days as military helicopters fired rockets repeatedly on that part of the city and black smoke rose from the buildings that were apparently hit.
The gunmen were being backed by foreign fighters, including those from Malaysia, Indonesia and Singapore, authorities said.
The militants had killed at least 19 civilians, while 20 security forces and 65 gunmen had died, according to the military.
The death toll looked likely to climb, with soldiers reporting the smell of corpses in a public market still being held by the militants.
Martin Thalmann, deputy head of the ICRC's Philippine delegation who is in Marawi, also said on Monday his staff had received reports from people trapped inside the militants' areas that residents had died from stray bullets and sickness.
The violence began when dozens of gunmen went on a rampage in response to an attempt by security forces to arrest Isnilon Hapilon, a veteran Filipino militant regarded as the local leader of ISIS.
Philippine Marine Major Rowan Rimas holds one of several high-powered firearms, which were recovered by Government forces in the fighting against Muslim militants.
Hapilon, a senior member of the Abu Sayyaf kidnap-for-ransom gang, is on the US government's list of most-wanted terrorists.
He was being protected in Marawi by the local Maute group, which has pledged allegiance to ISIS.
Hapilon, the Maute and other militants had been planning a major attack on Marawi, one of the few Islamic cities in the mainly Catholic Philippines with a population of 200,000 people, armed forces chief General Eduardo Ano said.
He said they were planning to launch the assault to coincide with the Muslim holy month of Ramadan, which began on the weekend, but the raid on Hapilon triggered them to attack earlier, according to Ano.
Muslim separatist rebellion in the southern Philippines has claimed more than 120,000 lives since the 1970s.
The main Muslim rebel groups have signed accords with the government aimed at forging a final peace, giving up their separatist ambitions in return for autonomy.
The Maute, the Abu Sayyaf and other hardline groups are not interested in negotiating and have in recent years looked to IS to help them.
The Marawi violence was intended to highlight their credentials to IS, security analysts have said.
Duterte said Saturday he was prepared to enforce martial law for as long as was necessary to end the terrorist threat.
The Islamic fighters are said to be well-armed and resilient and experts have warned that with ISIS weakened in Syria and Iraq, battered by years of American-led attacks, Mindanao could become a focal point for regional fighters.
The fighters' support network in Marawi remains unclear, though the power of one militant group - the Mautes - has grown in recent years.
Led by members of the city's Maute clan, the group has become increasingly active across Lanao del Sur province, where Marawi is located, and has been instrumental in the fighting this past week.