Philippine President Rodrigo Duterte was preparing to make a deal with Islamic State-inspired militants in the days after they laid siege to a southern city, but aborted the plan without explanation, an intermediary involved in the process said, Reuters reports.

Agakhan Sharief, a prominent Muslim leader, told Reuters that after a band of Islamist fighters overran parts of Marawi City on May 23 and took hundreds of people hostage, he was approached by a senior Duterte aide to use his connections with the Maute militant group's leaders to start back-channel talks.

Two other Marawi sources familiar with the matter confirmed the president had worked behind the scenes to hold talks with the Maute brothers, Omarkhayam and Abdullah.

However, the process was halted when Duterte in a May 31 speech declared he "will not talk to terrorists".

It was not immediately clear what prompted Duterte's about-face.

"The problem with our president, his mind is changing always," said Sharief, a cleric who has had roles in various peace agreements on the long-restive southern island of Mindanao. "He announced he will no longer talk to terrorists and that made our negotiations cut."

Duterte's top peace adviser and his spokesman did not respond to separate requests for comment.

Despite his tough rhetoric and frequent promises to wipe out militants, Duterte has a reputation as a peace-broker, having dealt with separatist and Marxist rebellions during his 22 years as mayor of Davao City in Mindanao, an island of 22 million with a long history of unrest.