Philippine President Gloria Arroyo has met with Malaysian Premier Mahathir Mohamad, setting the stage for new peace talks with Filipino Muslim rebels, the Department of Foreign Affairs said Saturday.

Arroyo and Mahathir met Friday on the sidelines of a UN General Assembly conference in New York, the department said in a statement, quoting Philippine foreign secretary Blas Ople who accompanied Arroyo to New York.

"This meeting sets the stage for the holding of peace talks in Kuala Lumpur," Ople said, adding that Mahathir "reiterated Malaysia's strong commitment to playing a crucial role in the peace negotiations by hosting and facilitating peace talks."

The two leaders discussed ways to prepare for the peace talks with the Muslim separatist Moro Islamic Liberation Front (MILF) including procedures and how to ensure the success of the negotiations, Ople said.

Kuala Lumpur has been fostering the peace process between Manila and the MILF, a 12,500-strong group that is fighting to set up an Islamic state in the southern third of the largely-Christian Philippines.

Arroyo told Mahathir that her government had taken measures to ensure the negotiations would be carried out smoothly.

Monitoring team

Mahathir in turn said Malaysia was willing to lead an international monitoring team from Islamic countries that would oversee the ceasefire between Manila and the MILF, Ople reported.

But Mahathir stressed that the technical details of such a monitoring team should be worked out first.

Philippine officials have said they hope that peace talks with the MILF will begin next month but no date has been set.

Mahathir also expressed Malaysia's support for the Philippines getting observer status in the Organisation of Islamic Conference (OIC) during the group's summit in Malaysia next month, Ople said.

However, Mahathir also said that the process for the Philippines to get observer status in the OIC might not be completed before the summit.

The OIC has also been aiding the peace process between the Philippines and the MILF. - AFP