The Philippines army has launched air strikes and artillery fire against Islamic rebels on the southern island of Mindanao.
President Arroyo recently broke off talks following increased violence
The army said it had killed up to 50 rebels, but a spokesman for the Moro Islamic Liberation Front (MILF) denied the group had suffered casualties. No bodies have been recovered.
President Gloria Arroyo authorised the strikes hours before leaving on a state visit to the United States, where she will meet President George W Bush on Monday.
She threatened to declare the MILF a terrorist group if it did not stop attacks by 1 June.
Peace talks between the government and the MILF collapsed last week, following the resignation of President Arroyo's special adviser on Mindanao, Jesus Dureza.
He is reported to have quit because of the heightened violence.
Almost 100 people have been killed since March. The MILF denies carrying out the attacks.
President Arroyo announced the offensive in a nationwide broadcast.
"We've decided to use extraordinary punitive force, not merely in view of tactical necessity, but to signify the determination of government to bring terrorists to justice," she said.
A spokesman for the MILF accused her of talking tough in order to win support from the US.
"It's a simple form of [boasting] so she can convince Bush to give more money. She could tell him, 'Look, our resources against terrorism are depleted'," the spokesman, Eid Kabalu, told the Philippine Daily Inquirer.
He said President Arroyo's announcement did not mark a change of policy.
"That is not new to us. With or without the order, military operations have been going on," he told the newspaper.
The military dropped at least six bombs and fired 135 rounds of artillery after the president's announcement, according to Lieutenant General Roy Kyamko, the head of the military's southern command.
The last two surviving hostages held by the Abu Sayyaf group in the southern Philippines escaped from their captors at the weekend.
The security forces said the two Filipino women were now safe in their hands.
The two women were unharmed
Abu Sayyaf is a group of armed Filipino Muslims which the United States regards as terrorists.
Only one of the Abu Sayyaf's hostages now remains unaccounted for and military officers say they believe he is dead.