The Philippines' largest Muslim insurgent group said Saturday it has a potentially serious rebellion in its ranks after a key leader broke away ahead of peace talks with Manila.

Ameril Umbrakato quit the Moro Islamic Liberation Front (MILF) seven months ago, taking with him at least a thousand fighters, top MILF leaders told a news conference.

It poses a potentially major threat to formal peace talks that start in Malaysia on Wednesday, conceded Murad Ebrahim, chairman of the 12,000-member movement that has been waging a deadly rebellion since 1978.

"We are talking with them and urging them to toe the line on the MILF position," Murad said.

News of the breakaway has alarmed the government, which told MILF leaders this could undermine the talks, MILF chief peace negotiator Mohagher Iqbal said. One analyst called the split "a spoiler" to the talks.

Previous peace talks collapsed in 2008 after the Supreme Court outlawed a draft peace settlement that would have given the MILF control over large areas of the mineral-rich southern island of Mindanao.

The group has been fighting for an independent Muslim state on Mindanao, which makes up the southern third of the largely Roman Catholic Philippines.

The Supreme Court's decision triggered attacks by MILF commanders including Umbrakato on Christian communities in Mindanao.

A humanitarian crisis ensued as 750,000 people fled their homes after about 400 others were killed, based on official data.

While most of the displaced population have moved elsewhere or returned to rebuild ruined villages, aid workers said as of late last year several thousands remained at temporary shelters.

More than 150,000 people have died since the early 1970s due to the rebellion, according to the government.

Umbrakato accused the leadership of turning its back on the original goal of an independent Muslim nation, Iqbal said.

"He said the MILF is a revisionist group," Iqbal told reporters invited to Camp Darapanan, a heavily guarded sprawling administrative rebel camp on Mindanao.

"We have sent ulamas (Muslim elders) to talk to him and we are trying to engage him," Iqbal added.

But security analyst Rommel Banlaoi, of the Philippine Institute for Peace, Violence and Terrorism Research, said the admission proved that there existed a clear divide between MILF radicals and moderates.

"He (Umbrakato) is going to be a spoiler to the peace process. His move demonstrates that the leadership of the MILF is already divided," Banlaoi told AFP.

The MILF is a 1978 splinter of the Moro National Liberation Front, which signed a 1996 peace treaty that won the large Muslim minority limited self-rule in four Mindanao provinces.

MILF chairman Murad acknowledged the Umbrakato split was borne out of frustration on the protracted peace settlement, but expressed hope the fallout would be minimised.

Murad said about 10 percent of MILF political and military leaders agree with Umbrakato, although they have been talked back into giving the talks another chance.

"But they cautioned us that an endless peace process and a ceasefire forever situation are intolerable," Murad warned.

Believed to be in his 70s, Umbrakato is described by military intelligence officials as a contemporary of the late Hashim Salamat, an Egypt-educated scholar who founded the movement more than 30 years ago.

He is said to have also trained in militant camps abroad and as a spiritual leader commands respect from young cadres who he uses to implement a radical version of sharia law in areas where his unit holds sway.