Manila and Beijing have a long history of territorial disputes in the South China Sea, but a violent clash at Second Thomas Shoal last month frayed relations between the countries.
Chinese coast guard personnel wielding knives, sticks and an axe surrounded and boarded three Philippine navy boats on June 17 during a resupply mission to Filipino troops stationed at the reef.
A Filipino sailor lost a finger in the clash, which was the most serious in a recent series of escalating confrontations.
Manila and Beijing agreed to de-escalate tensions and improve the Philippines-China Maritime Communications Mechanism at a bilateral consultative meeting on July 2, the diplomatic source said Wednesday.
Both sides have agreed to increase the number of communication channels beyond the current one between the maritime offices of the countries' respective foreign ministries, according to the source.
They also agreed to establish a line of communication between "representatives" of their leaders, the source said.
Another line will be set up between their respective foreign ministries, including at minister and vice minister level.
There will also be a communication channel between the Philippine and Chinese coast guards once a memorandum of understanding has been finalised.
Chinese foreign ministry spokesman Lin Jian confirmed Wednesday that the countries had "agreed to further strengthen sea-related communication and dialogue through diplomacy".
China and the Philippines launched the consultative meeting in 2017 to promote the peaceful management of conflicts in the South China Sea.
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