The 12,500-strong MILF has been fighting for a separate Muslim state in the southern third of the mainly Roman Catholic country for three decades.
Mrs Arroyo said the agreement was reached in Malaysia between the Moro Islamic Liberation Front (MILF) and presidential adviser Eduardo Ermita.
The 12,500-strong MILF has been fighting for a separate Muslim state in the southern third of the mainly Roman Catholic country for three decades.
Confirming the agreement, MILF spokesman Eid Kabalu said talks could begin early next month in Malaysia.
Mrs Arroyo told a news conference: "An accord has been signed in Kuala Lumpur.
"The MILF has agreed to resume the peace talks and form their negotiating panel shortly. Meanwhile, they also agreed to suspend all offensive military operations just like we did recently."
She said more details of the preliminary agreement would be made public later this week when Mr Ermita returns to Manila.
Quick response
Mrs Arroyo, who declared a unilateral truce with the MILF last month, moved quickly to re-open negotiations with the rebels as soon as she took office in January.
The MILF has been linked to bombings in the capital Manila.
Reports say observers from the 53-member Organisation of Islamic Conference (OIC) could also be present at the peace talks.
The MILF is the biggest Muslim group fighting for a separate state and is a breakaway faction of the larger Moro National Liberation Front (MNLF) which laid down its guns in 1996.
More than 120,000 people have died in the rebellion since it began some 30 years ago.
The peace process with the Muslim guerrillas had collapsed during the administration of Mrs Arroyo's predecessor, Joseph Estrada, who pursued a policy of what he called "all-out war".
Mrs Arroyo replaced him following a popular uprising in January.
She has given priority to the resumption of peace talks, not only with the MILF, but also with communist guerrillas who operate all over the country.
The communist-led National Democratic Front (NDF) declared their own ceasefire earlier this month, and are hoping to have peace talks of their own at the end of April.