MANILA (AFP) - Islamist gunmen killed nine people and injured 10 others as they attacked a town in the Philippines at dawn Monday (Aug 21), burning houses in which women and children were sleeping, police said.

About 60 members of the notorious Abu Sayyaf kidnap-for-ransom group entered a town in their stronghold on Basilan island in the southern Mindanao region and began shooting, local police chief John Cundo told AFP.

"This is an act of terrorism and cowardice. When our forces engaged them in a 45 minute firefight, and they felt our numbers and volume of fire, they backed away and fled," Chief Inspector Cundo said.

"What is unfortunate is that women and children were affected as they were still sleeping when this happened."

The militants burned four houses and a daycare centre in the town of Maluso, Chief Inspector Cundo said, adding police and the military were conducting "hot pursuit" operations against the gunmen.

The Abu Sayyaf is a loose network of militants formed in the 1990s with seed money from Osama bin Laden's Al-Qaeda network.

Its members have engaged in banditry and kidnapping, targeting foreigners in exchange for millions of dollars in ransom.

One faction based in Basilan has pledged allegiance to the Islamic State in Iraq and Syria group.

It is not clear whether that faction was involved in Monday's attack on Maluso, although its members are among militants who have been occupying, since May, parts of Marawi, the largely Catholic nation's most important Islamic city.

The militants have withstood a United States-backed military offensive in Marawi that has claimed more than 700 lives and displaced nearly 400,000 people.

President Rodrigo Duterte has imposed martial law across the southern third of the Philippines, including Basilan, to quell the militant threat.

Following Monday's attack, residents evacuated their homes in fear, and the authorities sent more troops to secure the area, according to Chief Inspector Cundo.

The Abu Sayyaf had launched similar attacks on the town in previous years, he added.

The incident came a day after the military rescued a Vietnamese hostage of the Abu Sayyaf, also on Basilan island, after nine months in captivity.

Troops rescued the hostage on Sunday in Basilan following intensified operations against the militants, the authorities said on Monday.

"The hostage was able to run from the militants in the course of military operations and our troops rescued him with the help of local connections," military spokesman Jo-Ann Petinglay told AFP.

"We have been conducting continuous operations against (the militants) involving air strikes. The group was under pressure."

Captain Petinglay denied a ransom had been paid for the Vietnamese hostage's freedom.

He and five and other crewmen were abducted in November from a Vietnamese cargo vessel sailing less than 20km from Basilan. Militants beheaded two of the sailors last month, prompting President Duterte to threaten to eat the militants alive in retaliation.