President Rodrigo Duterte raised the prospect of holding peace talks with Abu Sayyaf, an Islamic militant group which has abducted dozens of foreign sailors in recent months, offering federalism as a possible solution.
In an apparent about-face, Duterte appealed to the Abu Sayyaf, who are also blamed for the country's deadliest terror attacks, to come to the negotiating table.
"We cannot be forever treating human beings here, seriously wounded," he told reporters at a military hospital in the southern port of Zamboanga where he visited troops wounded in an offensive he had ordered against the militants.
"Let us talk. Let us give our people a chance."
The Philippine government is already observing a ceasefire with the region's largest Muslim guerrilla force, the Moro Islamic Liberation Front.
Earlier this year, Duterte had said he could not talk peace with the Abu Sayyaf because they were not driven by ideology.
Many analysts say, the Abu Sayyaf is mainly focused on running a kidnapping business rather than religious ideology.
However, Duterte conceded Friday military strikes on militants could prove devastating for civilians living in remote islands where the militants are embedded.
"I can bomb more if I want to," Duterte said.
"At the end of the day, what can I say to the Filipino? That we have wiped out almost all of our Yakan, Sama, Tausug (Muslim ethnic groups) brothers? Even those not connected with the violence now?"
Duterte added: "Either we talk, if you want autonomy or if you want something else, federalism, I am ready. I am committed to (a) federalism set-up to appease the Moro," he said, using a general term for Filipino Muslims.
The Abu Sayyaf, designated a "foreign terror organisation" by the United States, was set up with the help of the Al-Qaeda group in the early 1990s.
The militants have publicly pledged allegiance to Islamic State fighters in Syria and Iraq in recent months, though some security analysts consider them a bandit group motivated only by money.
Suspected Abu Sayyaf gunmen killed a German sailor and abducted her elderly male companion from their yacht earlier this month. They are also holding a Dutchman abducted in 2012.
In recent months, the Abu Sayyaf has been accused of kidnapping dozens of Indonesian and Malaysian sailors in waters off the southern Philippines.
Abu Sayyaf militants this year beheaded two Canadian hostages after demands for millions of dollars were not met.