MANILA, November 3, 2009 (AFP) - The Philippines said that the stalled peace talks with Muslim insurgents could be jeopardised after the rebels were accused of involvement in the abduction of an Irish priest.

The armed forces and the police had both received intelligence reports that rogue elements of the Moro Islamic Liberation Front (MILF) were behind the October 11 kidnapping of Father Michael Sinnott, senior officials said.

While the government "would like to give them the benefit of the doubt," the MILF leadership must impose "punishment or sanction against those involved to show good faith and that they are very sincere," presidential spokeswoman Lorelei Fajardo told reporters.

Separately, Interior Secretary Ronaldo Puno said the police had intelligence reports that an MILF unit was behind the abduction.

"It is clear to us that the kidnappers are either directly connected to or very closely associated to the MILF," Puno said, identifying a "Commander Al Asree" as the ringleader.

Fajardo said it was possible that the MILF leadership was not aware that some of its members were involved, noting earlier denials from the group.

"We hope that this is an isolated case, so we have to be very careful in handling this," Fajardo said.

Asked whether the incident could affect the peace talks, she said: "There might be some respite in peace talks, but we have to continue (the talks at some stage)."

The 79-year-old Sinnott, who has a history of heart problems, was kidnapped by six armed men from the compound of the Society of St. Columban mission house in Pagadian city on the strife-torn southern island of Mindanao.

He was believed to have been taken to a jungle area in nearby Lanao del Norte province where MILF rebels and other armed groups operate.

The military had initially said Sinnott was being held by a notorious pirate in the area, although Defence Secretary Gilberto Teodoro subsequently blamed rogue members of the MILF.

Puno said the MILF always blamed "breakaway groups" for kidnappings and other crimes but alleged it may be just a ploy.

MILF vice chairman Ghadzali Jaafar denied Puno's charges, saying the group had helped free other hostages in the past and was still willing to help free Sinnott.

"Why can't the government just trust the MILF for a brief time so we can work for a peaceful solution?" he in a radio interview.

But he expressed optimism that the matter would not affect efforts to revive the peace talks.

The military on Monday said a video of Sinnott released by the kidnappers at the weekend in which the priest relayed a two million dollar ransom demand, had given them clues about the identity of his captors and the location where he was being kept.

The government as well as the Columban order have rejected the ransom demand.

Peace talks with the MILF have been stalled since last year, when two MILF commanders broke a five-year-old ceasefire and launched large-scale attacks across Mindanao.

The talks however were however scheduled to resume this year after both sides agreed to allow the participation of international peace brokers.