Muslim rebels operating in the southern Philippines have rejected a new government peace proposal aimed at ending the decades long insurgency.

Negotiators from the Philippine government and the 11,000-member Moro Islamic Liberation Front (MILF) held two days of talks in the Malaysian capital, Kuala Lumpur.

A rebel representative told Philippine television that the plan did not address the true concerns of Philippine Muslims. He said, however, that the rejection of the deal does not mean negotiations are over.

Philippine government negotiator Marvic Leonen said he remained hopeful that talks will continue.

President Benigno Aquino has indicated he wants a peace accord by the time his term ends in 2016, with the hope that it would help open the resource-rich region to investors.

The MILF has been part of a nearly four-decades-old insurgency against the government. Its fight for self-determination has left more than 120,000 people dead and displaced more than a million.