U.S. and Philippine officials have agreed to bring American troops closer to the front lines in the campaign against Abu Sayyaf guerrillas, President Gloria Macapagal Arroyo said Saturday.

U.S.-trained troops are believed to have killed the group's most visible leader, Abu Sabaya, during a gunbattle at sea on Friday. Navy divers were searching for the body, and the military offered a $1,000 reward for its recovery.

Sabaya reportedly led kidnapping raids last year that captured dozens of hostages, including two American missionaries.

U.S. Special Forces troops are on Basilan island in the southern Philippines on a six-month mission to train and advise Filipino soldiers fighting the Abu Sayyaf, which has been loosely linked to al-Qaida.

The Americans are prohibited from engaging in combat and are currently confined to battalion headquarters.

But Arroyo received a message from President Bush "giving clearance to the American forces to get closer to the combat lines with the Filipino soldiers for training purposes," a statement from Arroyo's office said. The U.S. troops will still be barred from combat operations.

The terms of the exercise allow American troops to carry firearms but only to fire in self-defense.

Arroyo said Friday that the U.S. mission would end as scheduled July 31, despite clamoring by many Basilan residents to extend the U.S. presence on the island to ensure the Abu Sayyaf is wiped out and U.S. military infrastructure projects are completed.

Arroyo added, without elaborating, that more exercises would be scheduled.

Military officials said Filipino special forces – with surveillance and communications help from American troops – tracked down Sabaya and six of his men as they appeared to be fleeing Mindanao island, next to Basilan, in a boat before dawn Friday.

The military said four guerrillas were captured and Sabaya and the two others were shot and killed while trying to swim away.

No bodies have been found, but southern military commander Maj. Gen. Ernesto Carolina showed reporters camouflage uniforms, a driver's license, a pistol, ammunition, medicines and a pair of Sabaya's trademark sunglasses from a backpack recovered in Sibuco Bay.

Sabaya's personal belongings and reports from the guerrillas and soldiers involved in the clash confirm he died, Carolina said.

"In other words, there is no iota of doubt anymore that one of the dead bodies we are looking for right now belongs to Abu Sabaya," he said.

Carolina said one of the captured men complained of chest pain Friday and later died of a heart attack at a military hospital.

He also said troops arrested a village chief in Sibuco, Abbas Samson, on suspicion he gave sanctuary to Sabaya's group. Samson could face a conspiracy charge for complicity in the Abu Sayyaf kidnappings. Carolina said Sabaya's group stayed at Samson's house while they waited for a boat to take them to safety.

The U.S. military presence is a sensitive topic in this former American colony. Left-wing groups have mounted small but boisterous protests to oppose the exercise.

The Americans allowed the use of sophisticated surveillance equipment to help local troops track the rebels and their last three hostages – Wichita, Kan., missionaries Gracia and Martin Burnham and Filipina nurse Ediborah Yap.

Troops clashed with the captors in the jungles of southern Zamboanga del Norte province, near Basilan, on June 7. Martin Burnham and Yap were killed; Gracia Burnham was wounded but rescued and had has returned to the United States.