Philippine troops have killed 89 Islamist militants during more than a week of urban battles but a final showdown is expected to be fierce as the gunmen protect their leaders and hold hostages, authorities said yesterday.

Attack helicopters fired rockets yesterday morning into parts of Marawi, a Muslim city in the south of the mainly Catholic Philippines, that were still controlled by the militants fighting under the black flag of the Islamic State (IS) group.

President Rodrigo Duterte declared martial law across the entire southern region of Mindanao in response to the crisis, which he described as the start of a major campaign by IS to establish a foothold in the Philippines.

Eighty-nine militants had been killed in the fighting and the amount of territory in the city that the remaining gunmen controlled had been cut to just 10 percent, military spokesman Brigadier-General Restituto Padilla said yesterday.

However Padilla warned of more intense battles ahead, with the military believing three of the militants' main leaders were likely still in the city.

"That 10 percent is most likely the area that is heavily guarded and defended by any armed men if they are protecting any individual of high value," Padilla said.

The militants are also holding an unknown number of civilians hostage, according to Padilla and other authorities.

They initially took a priest and up to 14 other people hostage at the start of the crisis.

A video of the priest appeared on social media on Tuesday, in which he repeated the militants' demands to withdraw and said his captors were holding 240 people hostage.