Al Qaeda-linked militants in the Philippines have beheaded one of three Filipino factory workers they seized in the troubled south of the country last month, an official said Wednesday.

Witnesses said they saw two men believed to be militants from the Abu Sayyaf group abandon a package at a park on the southern island of Basilan, triggering panic, said Al Rasheed Sakalahul, the provincial vice governor.

Residents feared the package was a bomb and promptly alerted police.

NONE But the parcel turned out to contain the severed head of Mark Singson, one of three workers at the Hitech Wood Craft Corp. seized by heavily-armed Abu Sayyaf militants from Basilan's Maluso town on November 10.

"The severed head of the victim was found stuffed inside a plastic bag and abandoned at a park," Sakalahul said.

He said the head was later positively identified by relatives of Singson.

There was no immediate word on the fate of the two others, although the factory owner earlier said that Abu Sayyaf militants had warned they would harm the hostages if an undisclosed ransom was not paid, Sakalahul said.

'Bearers of the Sword'

Founded in the early 1990s by Afghan-trained Islamic firebrand Abdurajak Abubakar Janjalani with seed money from Osama bin Laden, the Abu Sayyaf or "Bearers of the Sword" initially fought for an independent Islamic state in the southern Philippines.

Janjalani however was killed in a gun battle with police in 1998, and the rebels have since morphed into a criminal organisation specialising in bombings and kidnappings targeting foreign missionaries and businessmen.

The group is on the US government's list of foreign terrorist organisations and is also blamed for the deaths of two American hostages snatched from an island getaway in 2001.

The kidnapping of the three factory workers came just a day after a school principal kidnapped by the group in nearby Jolo island was also beheaded.

In that same week, US Secretary of State Hillary Clinton visited the country to re-affirm defence and diplomatic ties with the Philippines.

Clinton's visit threw the spotlight on joint efforts by the allies to crush the Abu Sayyaf, a rag-tag group of about 300-400 gunmen fighting out of the jungles of Basilan and Jolo.

American Special Forces have been rotating in small numbers in the south since 2001 to train and equip their Filipino counterparts.

While they are not allowed to join combat operations, they have provided vital intelligence that has led to the capture or deaths of top Abu Sayyaf leaders in the past eight years.

But the group remains well entrenched in the jungles, and has managed to replenish its ranks by promising monetary rewards to impoverished Muslim youths, analysts say.

Abu Sayyaf attacks have left at least 48 Filipino soldiers and 70 insurgents dead since January. In September, two US soldiers were killed in a roadside bomb in the deadliest attack on American forces so far by the militant group.

-AFP