Francis Taylor, the US State Departments coordinator for counter-terrorism with the rank of ambassador-at-large, said Washington is closely watching the peace negotiations between the government and the MILF, which has been linked to al-Qaeda and its Indonesia-based affiliate in Southeast Asia, Jemaah Islamiyah (JI).
Taylor is in Manila to attend an international conference on anti-terrorism and tourism recovery. He said the US government remained fully supportive of the Arroyo administrations efforts to forge peace with the MILF.
The government and the estimated 12,000-strong MILF have been holding informal talks, brokered by Malaysia.
"We dont discuss publicly our intention on any organization around the world. But we support President Arroyo and her efforts to ink a peace agreement with the MILF," Taylor told reporters on the sidelines of the conference, held at the tightly guarded Shangri-La Hotel in Makati City.
"We believe that getting terrorists and people involved in terrorist activities or insurgent activities out of that business into the legitimate political processes is always good business and we want to support that," he said.
Last week, Presidential Adviser on Special Concerns Norberto Gonzales said Washington was planning to include the MILF in its list of "terrorist" organizations and had already informed MILF military commander Al-Haj Murad of the planned US move.
He later backtracked, however, saying the plan was still under review.
Mrs. Arroyo and Taylor also discussed the status of a proposed anti-terrorism bill currently pending in Congress and the proposed amendments to Manilas anti-money laundering law which is considered a potential weapon in tracking down the funds of terrorists, Malacañang said.
Mrs. Arroyo also brought up the issue of Filipino airport screeners who stood to lose their jobs under a new US law which stipulates all airport security screeners in the United States to be US citizens. The law takes effect this month.
"They will be losing their jobs next week," Mrs. Arroyo told Taylor.
Taylor assured her that he will see what he can do on the matter, the Palace said.
Founded by Hashim Salamat, the MILF has been fighting for an independent Islamic state in Mindanao since 1977.
The MILF earlier denied news reports that it has ties with al-Qaeda and that it built two training camps for the Osama bin Laden-led terrorist network in the 1990s.
The MILF, Abu Sayyaf and Jemaah Islamiyah are the main suspects in a series of bombings last month in Zamboanga City and Metro Manila.
Jemaah Islamiyah is also being blamed for the bomb attacks on a Bali tourist nightspot in Indonesia, last month, killing nearly 200 people, many of them Australian tourists.
In August, Washington declared the Communist Party of the Philippines (CPP) a terrorist organization as part of its global war on terror.
In the United States, once an organization is declared "terrorist," it makes it illegal for US citizens to provide support to that organization.
US law also requires financial institutions to block assets and it makes members and supporters of that organization inadmissible to the United States or subject to deportation.
The CPP protested the terrorist tag, saying it is a legitimate revolutionary organization, decriminalized after the 1986 ouster of strongman Ferdinand Marcos. Paolo Romero