Article published on the 2008-08-21 Latest update 2008-08-21 11:56 TU
"Cancellation of the Memorandum of Agreement on Ancestral Domain (MOA-AD) is a painful step," said presidential spokeswoman Lorelei Fajardo.
Fajardo said President Gloria Arroyo was "sensitive" to the objections of local Christian leaders, who have taken to the streets calling it a "sell-out."
The government had agreed to expand an existing Muslim autonomous zone in a bid to end decades of violence. But Christian communities opposed the deal and the rebels launched attacks after the Supreme Court blocked it.
Earlier this week, at least 30 people died during raids by guerrillas from the Moro Islamic Liberation Front (MILF) on several towns near the border of the existing autonomous zone in the southern island of Mindanao.
The government had hoped that the autonomy deal - which would see the existing region expanded by 712 villages - would lead to talks with the rebels.
However, on 4 August the Supreme Court suspended the agreement after Christian lawmakers argued it was unconstitutional.