The Philippine government says it has reached a preliminary peace deal with the nation's largest Muslim rebel group in the country's south, intended to end a decades-long separatist insurgency that has killed more than 120,000 people.

President Benigno Aquino said in a nationally-televised announcement Sunday that the deal with the Moro Islamic Liberation Front – or MILF – creates a new Muslim semi-autonomous region called “Bangsamoro” to replace an existing one he called a “failed experiment.”

The area would be established in the resource-rich southern region of Mindanao, which the MILF regards as its ancestral homeland.

Officials said the agreement – which sets up the extent of power, revenues and territory in the territory – will be signed October 15 in the capital, Manila. They said if all goes well, a final peace deal could be reached by 2016, when Mr. Aquino's six-year term ends.

The president said the pact was an assurance that the MILF will no longer aim to secede from the country.

The group hailed the breakthrough, achieved in the latest round of peace talks in Malaysia that ended on Saturday, as the “beginning of peace.” Rebel vice chairman Ghazali Jaafar said the agreement provides a huge relief to people who have long suffered from war.

U.S. Secretary of State Hillary Clinton called the agreement “a testament to the commitment of all sides for a peaceful resolution” to the conflict. She said the next steps will be to ensure the agreement is fully implemented.

The framework, negotiated with MILF rebels in the Malaysian capital Kuala Lumpur last week, sets up a 15-member Transition Commission which has about two years to draft a law setting up the new region.

Mr. Aquino said that under the arrangement, the Philippine government would continue to hold exclusive powers over defense and security, foreign and monetary policy in the new autonomous region. Muslims there would be assured of an “equitable share of taxation, revenues … and equal protection of laws and access to impartial justice.”

Rebel forces would be deactivated gradually “beyond use.” Four decades of deadly fighting in the south has prevented development in the region.