MANILA, PHILIPPINES - A senior Red Cross official on Friday urged the Philippines to consider the demands of Islamic militants holding three aid workers hostage, but the government refused to order any military pull-back.

Alain Aeschlimann, the Asia-Pacific operations chief for the International Committee of the Red Cross (ICRC), appealed to the authorities to consider a retreat on the southern island of Jolo, where the hostages are being held.

'In the interest of our three staff, the ICRC asks the authorities to consider the kidnappers' demands regarding the position of troops,' he said in an appeal carried by the international aid agency's website.

The Abu Sayyaf has threatened to behead one of the hostages if the government fails to pull back its troops by March 31.

Aeschlimann said the Red Cross had been in contact with the hostages on Monday, and that the beheading threat 'has obviously increased the stress and hardship they are experiencing.'

'Following the kidnappers' renewed threats, the ICRC once again appeals to the abductors' sense of humanity and asks them to avoid taking any action that could endanger the lives of Mary Jean, Eugenio and Andreas,' he added.

Aeschlimann also called on Philippine authorities to 'refrain from further military operations in the area' as it could put the hostages at risk.

Interior Secretary Ronaldo Puno said 'there is no possibility that demand can be granted.'

The kidnappers were demanding all military and police forces be withdrawn to a 'very small area' around the provincial capital, Puno said.

'If we do this, every person outside this area becomes a potential kidnap victim,' he told a news conference.

He appealed to the Abu Sayyaf 'to be reasonable, to have respect for human life and to value the contributions that the ICRC workers have made.'

He said the government was willing to 'explore further avenues within the next few days,' adding that the military and police were willing to pull back a short distance from the kidnappers, giving them a 'safe area' of at least 25 square kilometres (10 square miles).

Five people have already died in clashes between the gunmen and the military trying to hunt them down.

Puno said these clashes were caused when the Abu Sayyaf tried to break through a cordon around their hiding place, possibly to reach the coast to escape the island.

He stressed that government forces were not pursuing the kidnappers. 'They are not really running from anybody,' he said.

Jolo Governor Abdusakur Tan, who heads a committee that is negotiating with the kidnappers, said so far, the kidnappers had made no demand for ransom but at one point, they asked him for a loan of a million pesos ($31,300).

He told the news conference that the band holding the hostages now numbered about 100 gunmen.