The Philippine government said Saturday they had cleared a last hurdle in long-running peace negotiations with Muslim rebels aimed at ending a deadly decades-old insurgency in the country's south.

President Benigo Aquino hopes to secure a final peace settlement before leaving office in mid-2016 to end the rebellion by Muslim groups, which has left some 150,000 people dead.

Negotiators met from Wednesday on the outskirts of Malaysia's capital Kuala Lumpur to tackle a "normalisation" deal detailing how the rebels will hand over their weapons and the creation of a security force to police what would be a Muslim self-rule area.

The deal is the last of four power-sharing accords that must be agreed between the government and the Moro Islamic Liberation Front (MILF) rebels, before a final peace deal can be signed.

Chief government negotiator Miriam Coronel Ferrer said both sides had completed discussions on the deal. She declined to immediately comment further.

"The peace process... is aimed to really bring about a good foundation for sustainable peace and development in Mindanao and in that sense we consider this a very important development," Ferrer told reporters.

Aquino warned last month that disarming the MILF would be a "heavy and contentious" issue.

Apart from the MILF, many other armed groups operate in the south, including former rebels who had resorted to banditry and terrorism.

The insurgency, which began in the 1970s, has left parts of the southern Philippines mired in deep poverty and instability.