Philippine President Gloria Macapagal Arroyo says she has approved the deployment of American troops to the southern Sulu islands, a stronghold for the militant Islamic group the Abu Sayyaf.
US troops are training local soldiers in the southern Philippines
US forces had been due to hold joint military exercises with Filipino troops in the region earlier this year, but the plans were delayed because of local opposition and disagreements over the extent of US participation.
America wanted its troops to be allowed a direct combat role, but this would have violated a Philippines law banning active combat by foreign soldiers.
Last year, the joint exercises were held on nearby Basilan island, where American troops were only allowed to fire at Abu Sayyaf rebels in self-defence.
The Abu Sayyaf has been linked by both Washington and Manila to the al-Qaeda terrorist network, and both countries class the group as a terrorist organisation.
The Abu Sayyaf - which has an estimated 300-400 members in Sulu and Basilan - is known for its methods of kidnapping people for ransom.
US special forces are already involved in training local units on the island of Mindanao, and the US has repeatedly pushed for the programme to be extended to nearby Sulu and its main island of Jolo.
Last month Ms Arroyo appeared to rule out US deployment in Sulu, saying this year's joint "Balikatan" exercises would go ahead in other provinces.
But on Wednesday, she said the exercises "will be held in many places, including Sulu."
She emphasised that the exercises would still comply with the Philippine constitution.
She also made reference to local Filipino resistance to the presence of US troops in the region - which to many is a reminder of the bitter clashes between Muslim fighters and US
colonial forces in Sulu in the early 1900s.
"We acknowledge the opposition to this exercise. We shall take this into consideration," she said.
"We are determined to cut down the entire body of terrorism in
the country, and the Sulu connection is vital to this objective."
She did not give any further details of when the US deployment would take place or how many troops would be involved.