Islamist gunmen killed nine people and injured ten others as they attacked a town in the Philippines at dawn Monday, burning houses in which women and children were sleeping, police said.

About 60 members of the notorious Abu Sayyaf kidnap-for-ransom group entered a town in their stronghold on Basilan island in the southern Mindanao region and began shooting, local police chief John Cundo told AFP.

"This is an act of terrorism and cowardice. When our forces engaged them in a 45-minute firefight and they felt our numbers and volume of fire they backed away and fled," Cundo said.

"What is unfortunate is that women and children were affected as they were still sleeping when this happened."

The militants burned four houses and a day care centre in the town of Maluso, Cundo said, adding police and the military were conducting "hot pursuit" operations against the gunmen.

The Abu Sayyaf is a loose network of militants formed in the 1990s with seed money from Osama bin Laden's Al-Qaeda network.

Its members have engaged in banditry and kidnapping, targeting foreigners in exchange for millions of dollars in ransom.

One faction based on Basilan has pledged allegiance to the Islamic State group.

It is not clear whether that faction was involved in Monday's attack on Maluso, although its members are among militants who have been occupying since May parts of Marawi, the largely Catholic nation's most important Islamic city.

The militants have withstood a US-backed military offensive in Marawi that has claimed more than 700 lives and displaced nearly 400,000 people.

President Rodrigo Duterte has imposed martial law across the southern third of the Philippines, including Basilan, to quell the militant threat.

Following Monday's attack, residents evacuated their homes in fear and authorities sent more troops to secure the area, according to Cundo.

The Abu Sayyaf had launched similar attacks on the town in previous years, Cundo added.

The incident came a day after the military rescued a Vietnamese hostage of the Abu Sayyaf also on Basilan island after nine months in captivity.

source: AFP