The Philippine military has said foreign militant fighters are involved in the clashes that broke out in Marawi in the southern island group of Mindanao where the mainly Muslim city is located.

Their "clear intention", according to a report that President Rodrigo Duterte submitted to Congress, is "to establish an Islamic state (in Mindanao)".

"There are... Malaysians, Singaporeans… in the fight that has been ongoing in Marawi. We are continuously verifying that there have been a number of them who have been killed," military spokesman Restituto Padilla said at a news conference here.

About a hundred militants seized large parts of Marawi, a city of more than 200,000 some 814km south of Manila, on Tuesday, after security forces raided a suspected hideout of Arabic-speaking preacher Isnilon Hapilon, named by the Islamic State in Iraq and Syria (ISIS) as its top man in South-east Asia.

An army brigade, backed by helicopter gunships and armoured vehicles, has been sent to dislodge them, but they remained holed up in parts of Marawi last night.

Duterte, addressing soldiers fighting the militants, said there was still a chance for peace.

"My message mainly to the terrorists on the other side is we can still solve this through dialogue," he said.

The Marawi crisis prompted Duterte to declare Mindanao under martial law late on Tuesday and cut short his Russia trip to return to the Philippines.

Laying down reasons for the need for martial law in Mindanao, Solicitor-General Jose Calida told reporters here: "What is happening in Mindanao is no longer a rebellion of Filipino citizens. It has transmogrified into an invasion by foreign terrorists who heeded the clarion call of the ISIS to go to the Philippines, if they find difficulty in going to Iraq or Syria."

Asked about the presence of foreign fighters in Marawi, Calida said: "Malaysians, Indonesians, from Singapore, and other foreign jihadists… And that is bothersome.

"Before, it was just a local terrorist group. But now, there is an ideology. They have subscribed to the ideology of ISIS. They have pledged allegiance to the flag of ISIS. They want to create Mindanao as part of the caliphate."

Former president Fidel Ramos yesterday slammed Duterte for saying on his return to the Philippines that he might place the whole country under martial law, warning against inevitable abuses under military rule.

Ramos, a former general who helped enforce martial law under the late dictator Ferdinand Marcos, later became a leading figure in the "People Power" revolution that overthrew the Marcos government in 1986.

"We are all victims of martial law. We would be much higher now in the ranking of nations, in the appreciation of other nations for the Philippines, if we did not have martial law," he said.

Brigadier-General Padilla said at least 31 militants have been killed in Marawi and that of the 12 identified so far, six were foreigners.

The spokesman said that while there were Indonesians and Malaysians among those killed, the authorities were still verifying their names and identities.

Brig-Gen Padilla insisted that the militants in Marawi are ISIS inspired and that the militant group is not orchestrating the fighting, despite the presence of foreign fighters.

"The groups trying to ally with (ISIS) are feverishly trying to comply with requirements that have been set for them to (become a part of ISIS)," he said.