JOLO (Philippines) - NEGOTIATIONS for the release of a prominent television journalist and her crew in the southern Philippines have reached a critical stage, sources close to the talks told reporters on Thursday.

Suspected Muslim extremists seized Ces Drilon, a senior anchorwoman for the ABS-CBN network, two members of her crew and a Muslim academic accompanying them on the island of Jolo on Sunday.

'We know the hostages are all OK,' said the source, speaking on condition of anonymity.

The mayor of Indanan town, Alvarez Naji, told reporters he had spoken with Drilon on Wednesday night by telephone.

'I informed her that there was a little misunderstanding on the expenses to be paid for their stay,' he said, in an apparent reference to difficulties over the ransom talks.

Accommodation, billeting or expenses are terms often used by kidnappers in the Philippines rather than demanding a ransom as they are more acceptable to negotiators.

ABS-CBN said in a statement on Wednesday that it would abide by its policy of not paying ransoms, as this would 'embolden kidnap-for-ransom groups to abduct other journalists, putting more lives at risk.'

Those kidnapped with Drilon were cameramen Jimmy Encarnacion and Angelo Valderama and a guide, Mindanao State University professor Dinampo.

Unconfirmed reports said that Dinampo may have suffered a 'mild' stroke but this could not be confirmed.

Police and military sources would not comment on a media report that the group was being held by a Malaysian Jemaah Islamiyah bomb maker wanted by the United States.

The Philippine Star newspaper named the Malaysian as Zulkifli bin Hir, who it said was holed up with local Abu Sayyaf militants Umbra Jumdail and Albader Parad.

'A US-trained engineer, Zulkipfli of Muar from Johor is the principal suspect in many bombing attacks in the Philippines, where he has been in hiding since August 2003 and training Islamic militants in handling explosive devices,' the paper said, quoting an unnamed military source.

Washington has offered a five-million dollar reward for the capture of the Malaysian.

Meanwhile, on the nearby island of Basilan, Muslim extremists kidnapped two Philippine Marines on Thursday and were demanding the release of detained Abu Sayyaf militant Sali Dungkal Alih, the military said.

Alih was arrested on May 6 by police and military agents on the island.

'They are offering us a concession - give us the liberty of Alih and then we will release the Marines,' said military spokesman Lieutenant Colonel Edgardo Arevalo.

Lt Col Arevalo said the government was sticking to its position of not giving in to such demands. -- AFP