MANILA, Philippines - Muslim rebels waging a 32-year war in the southern Philippines on Wednesday said a peace deal with President Gloria Arroyo's administration was unlikely, after rejecting its latest offer.

The Moro Islamic Liberation Front (MILF), said the government's proposal made when talks in Malaysia resumed last month, was "unacceptable", the group's negotiator, Mohagher Iqbal, told the Agence France-Presse.

"There was nothing in their draft comprehensive compact agreement that is worth considering at this stage," Iqbal said.

In Manila's proposal, the government offered to share power in areas such as tax collection and control of natural resources the MILF considers as its "ancestral domain" on the southern island of Mindanao.

Iqbal, however, dismissed the proposal as a resurrection of two previous offers under which "government would continue to rule the lives of the Muslims".

"What we want is a real state and sub-state relationship where we can have real governance and control over our lives," Iqbal said. "We don't want to be a mere token administrative arm for the region."

He said that MILF and government negotiators were trying to break the deadlock, but he said any deal before Arroyo ended her term as president on June 30 was unlikely.

"The prospects for a final accord before Arroyo steps down is not good," Iqbal said.

Arroyo signed a ceasefire with the MILF in 2003 to pave the way for peace talks to end an insurgency that began in 1978 and has killed over 150,000 people.

The talks collapsed in 2008 after the Supreme Court outlawed a proposed deal that would have given the MILF control over large areas in the south.

In retaliation, MILF forces unleashed deadly attacks across Mindanao, leaving nearly 400 combatants and civilians dead and displacing over 700,000 at the height of the fighting.

A new ceasefire was signed in November, paving the way for fresh talks, but over 250,000 people still remain displaced, according to government figures.