MANILA - Malaysia would be unable to host peace talks between the Philippines and Muslim separatists while Manila treats the rebel negotiators as terrorist fugitives, Kuala Lumpur's envoy here said today.

Malaysia earlier offered to host the negotiations, but Kuala Lumpur has since urged Manila to lift arrest warrants and bounties against senior Moro Islamic Liberation Front (MILF) officials so talks to end the decades-old rebellion in the southern Philippines could start.

"It (the issue of arrest warrants and bounties) has to be resolved," Malaysian ambassador to Manila Taufik Mohamed Noor told reporters here. "It is a prerequisite."