Philippine soldiers killed three Al-Qaeda-linked extremists in a gun battle in the southern Philippines on Sunday, a military commander said.

The battle with members of Abu Sayyaf, a local militant group in the strife-torn island of Basilan, was proof of the military's continuing efforts to combat terrorism even a decade after 9/11, said Colonel Alexander Macario.

"This shows we have been relentless in waging war on terrorism in this part of the country," he said.

Macario's anti-terror task force tracked down a band of Abu Sayyaf militants and killed three extremists, the colonel said, forcing the rest to flee the gunfight leaving the dead bodies behind.

He said the militants engaged by his task force were linked to a series of kidnappings in the south in recent years, including the abduction of a Sri Lankan peace activist in 2009.

The Abu Sayyaf is a small group of Islamic militants founded in 1990 with Al-Qaeda funding and has been blamed for the nation's worst terrorist attacks, including a ferry bombing that killed more than 100 in 2004.

The group is also wanted for the kidnapping of three US citizens in 2001, two of whom died while in captivity.

The Philippines is a major non-NATO ally of the US, and American troops have been stationed in Basilan and other areas of the southern Philippines since early 2002 to train local forces in how to combat the Abu Sayyaf.

In Manila, US ambassador Harry Thomas thanked the Philippines for its support in the fight against global terrorism.

"We remain grateful for the determination of our partners, especially here in the Philippines, and very mindful of their sacrifices," Thomas said in a speech to foreign businessmen.

"Working together we have reduced the threat of terrorism. We cannot prevent every terrorist act, but together we have blunted their capabilities and debunked their pretensions of serving a higher ideal."

Despite the capture and killing of many key Abu Sayyaf leaders, the group, believed to number about 300 militants, survives with the support of local Muslim communities and through kidnappings for ransom and other crimes.

Abu Sayyaf gunmen are suspected of holding a Philippine-born American woman, her 14-year-old son and her her Filipino teenage nephew in Basilan after their abduction in July.

The group is also recruiting younger, more enterprising members, Rommel Banlaoi, a respected expert on terror groups said.

"Based on our studies, they have the ability to replenish their membership," Banlaoi, head of the Philippine Institute for Peace, Violence and Terrorism think tank told ABS-CBN television.