MANILA - The Australian government is giving $920,000 (P34.5 million) worth of food and other supplies to thousands of residents who were displaced by Islamist militants holed up in Marawi City.

In a statement, Australian Foreign Minister Julie Bishop said the aid includes the provision of tarpaulins, sleeping mats, mosquito nets, water and sanitation kits, 500 tons of pre-positioned rice, hygiene items, torches and whistles for protection, sanitary supplies, clothes, and clean birthing kits.

The assistance is in addition to the $40 million that Australia pledged last March in support of the Philippines' peace process, Bishop said.

The official also affirmed her government's support for the Philippines' campaign against terrorism and ending the insurgency wracking Mindanao.

"The Government is committed to supporting the peace process and development in Mindanao, which are critical for a strong and stable Philippines," Bishop said.

"The Australian Government continues to work with the Philippine Government to combat terrorism in our region."

The seizure of Marawi and the dogged fight to regain control of it has alarmed Southeast Asian nations which fear Islamic State - on a backfoot in Iraq and Syria - is trying to set up a stronghold in the Muslim south of the mainly Roman Catholic Philippines that could threaten the whole region.

Fighting was intense early on Tuesday as security forces made a push to drive the militants, entrenched in Marawi's commercial district, south towards a lake on the edge of the city.

• Philippines launches offensive in Marawi, with aim to end battle by weekend

Planes flew overhead dropping bombs while on the ground, automatic gunfire was sustained with occasional blasts from artillery. Armored vehicles fired volleys of shells while the militants responded with gunfire and rocket-propelled grenades.

Fighting later died down as heavy rain fell but had resumed by evening.

Military sources said troops were attacking the militants from three sides and trying to box them towards the lake.

As of Tuesday, the military said 258 militants, 65 security personnel and 26 civilians had been killed. Hundreds of people are unaccounted for, with many believed to be hiding in the basements of the city. -- With Reuters