The biggest Muslim rebel group in the Philippines will sign a peace deal on Thursday aimed at ending four decades of deadly conflict that has condemned millions in the nation's far south to brutal poverty.

The agreement between the Moro Islamic Liberation Front (MILF) and President Benigno Aquino's government envisages a new, southern autonomous region for the Philippines' Muslim minority with locally elected leaders by mid-2016.

"For many years we have been leading the Bangsamoro people's struggle and our people have gone through a lot of hardships," MILF vice chairman Ghazali Jaafar told AFP, using a local term for the Philippines' Muslim minority.

"This agreement is very important to us because this ends the fighting in Mindanao."

Muslim rebels have been battling since the 1970s for independence or autonomy in the southern region of Mindanao, which they regard as their ancestral homeland.

The conflict has left tens of thousands of people dead while Mindanao has become one of the nation's poorest and most corrupt areas, with Muslim and Christian warlords ruling over large parts.

The fighting and poverty has also proved to be fertile conditions for Islamic extremism, with the Al-Qaeda linked Abu Sayyaf group and other hardline militants making remote regions of Mindanao their strongholds.

The MILF, which the military estimates has 10,000 fighters, is easily the biggest Muslim rebel group in Mindanao, and Aquino believes a political settlement is the key to securing a lasting peace.

"It is important, it is historic. It is going to be a major contribution for the peace and development of the entire country," Aquino's adviser on the peace process, Teresita Deles, said this week.

Aquino and MILF chairman Murad Ebrahim will oversee the signing of the peace deal during a high-profile ceremony at the presidential palace in Manila attended by about 1,500 people, including Malaysian Prime Minister Najib Razak.

Malaysia has hosted and brokered the peace talks, which began 17 years ago.

The peace deal outlines plans to create a Bangsamoro self-rule area in Mindanao that would cover about 10 percent of territory in the majority Roman Catholic-populated Philippines.

There are about 10 million Muslims in the Philippines, roughly 10 percent of the population, according to government statistics. Most live in the south of the country.

The autonomous region would have its own police force, a regional parliament and power to levy taxes, while revenues from the region's vast deposits of natural resources would be split with the national government.

It would have a secular government, rather than being an Islamic state. The national government would retain control over defence, foreign policy, currency and citizenship.

- Fragile peace -

However there are no guarantees the peace deal will be implemented by the middle of 2016, a crucial deadline as that is when Aquino is required by the constitution to end his six-year term.

Aquino needs to convince Congress to pass a "basic law" to create the Bangsamoro autonomous region, ideally by the end of this year to allow time for other steps such as a local plebiscite.

But even though Aquino's ruling coalition has a loose majority and he still enjoys record-high popularity ratings, there are concerns politicians could reject or water down the proposed law.

Powerful Christian politicians in Mindanao are regarded as potential deal breakers, while others elsewhere may see political advantage in opposing the deal to appeal to some Catholics ahead of the 2016 national elections.

"There is a danger that this could be hijacked by politically savvy and entrenched politicians," Jesus Dureza, the chief peace negotiator with the MILF from 2001 to 2003, told AFP.

Islamic militants opposed to the peace deal are another threat, and could continue to create enduring violence in Mindanao.

Among the potential spoilers is the Bangsamoro Islamic Freedom Fighters, an MILF splinter group of a few hundred militants that has carried out deadly attacks in the south in recent years.

Troops have been placed on high alert in the south, in case militants seek to distract from Thursday's peace deal with attacks.

The MILF leadership has committed to working with the government to neutralise the threat of the BIFF.

However the MILF will not give up its arms or the identities of its fighters until the basic law has been passed, highlighting the fragility of Thursday's peace deal.

Muslim history in the southern Philippines
Manila (AFP) March 27, 2014 - The Philippine government is to sign a peace deal Thursday to end a decades-long Muslim rebellion in the country's south that has claimed tens of thousands of lives.

The leaders of the Moro Islamic Liberation Front (MILF), the biggest remaining rebel group, will sign the pact at the presidential palace in Manila.

The following are key moments in the history of the insurgency, and the peace talks:

13th Century: Arab traders introduce Islam to the Sulu island group near the lower tip of a Southeast Asian archipelago, later to be called the Philippines.

1521: Portuguese explorer Ferdinand Magellan, in a voyage to look for alternate routes for the vital spice trade, lands on Homonhon island on the Pacific coast, converts natives to Christianity and claims the archipelago for Spain.

1898: The Philippines is ceded to the United States as part of the settlement of the Spanish-American War, with the victors later mounting a bloody pacification campaign against Muslims in the south that lasts several years.

1930s: US authorities encourage Christians to migrate to the southern region of Mindanao, which was mostly populated by Muslims. The policy of Christianising the region is accelerated in the 1950s and 1960s after the Philippines wins independence. Muslims eventually become a minority in many parts of the southern Philippines, fuelling resentment at rulers in Manila.

1968: Then-Philippine president Ferdinand Marcos recruits Filipino Muslims for a covert force to seize Sabah state from Malaysia. But when the recruits complain, Marcos has at least 23 of them killed in what becomes known as the "Jabidah Massacre". The incident helps radicalise Filipino Muslims.

1969: Muslim scholar Nur Misuari establishes the Moro National Liberation Front (MNLF), which begins an armed campaign to put up a separate Islamic state in the southern third of the country.

1972-1976: Fighting rages between government forces and the MNLF, which is supported by some Muslim countries. Thousands are killed with whole towns being destroyed in the violence.

1976: Under a deal brokered by the Organization of Islamic Conference (OIC), the MNLF signs an agreement with the Marcos administration to end hostilities in exchange for the government working to grant greater autonomy in Muslim-populated areas.

1977: Misuari's deputy, Hashim Salamat, leads a group of key commanders in splitting from the MNLF. They were unhappy with Misuari's compromise and vowed to continue fighting for independence. Salamat later officially formed the MILF.

1986: Dictator Ferdinand Marcos is toppled and replaced by Corazon Aquino, who launches peace talks with the MNLF. The MILF declines to take part.

1996: The MNLF signs a peace settlement with then president Fidel Ramos' government and wins limited self-rule over the most impoverished Muslim regions of the south.

1997: The MILF signs a ceasefire and begins peace talks with Ramos' government, a process that is disrupted by outbreaks of major fighting.

2008: The Philippine Supreme Court blocks a peace deal with then-president Gloria Arroyo's administration that would have given the MILF control over a large area of the south, ruling it was unconstitutional. The decision triggers fighting that leaves more than 400 people dead.

August 4, 2011: President Benigno Aquino flies to Japan for a secret meeting with Murad Ebrahim, who had become the new MILF leader after the death of Hashim Salamat in 2003. It is the first direct talks between a Philippine president and MILF rebel leader since peace talks began. The meeting becomes recognised as a key breakthrough in the peace process.

October 15, 2012: The MILF signs a preliminary agreement at the presidential palace outlining a broad roadmap for peace, with the details on power sharing, wealth divisions and disarmament later agreed upon during negotiations in Malaysia.

September, 2013: Misuari's armed followers attack the southern port of Zamboanga in a bid to block the MILF peace deal that they fear would sideline the MNLF leader. The attack sparks three weeks of urban conflict with the military that leaves at least 244 people dead and 116,000 civilians displaced.

January 25, 2014: Government and MILF negotiators conclude talks in Malaysia on the details of the proposed peace agreement.