President Gloria Arroyo ''has approved the creation of a formal negotiating panel,'' according to Cruz, who said he would join the Philippine panel alongside Foreign Secretary Alberto Romulo.

''Once this is in place, they will discuss the draft. I've seen the draft,'' he said. ''There aren't too many kinks.''

The proposed deal with Canberra should be wrapped up before the year ends to allow Manila to submit the accord to the Senate for ratification, Cruz said.

The Philippines proposed a joint military training accord with Australia and other Southeast Asian countries last year as part of its efforts to fight terrorism.

The Senate ratified a visiting forces agreement with the United States in 1999, and in addition to large-scale annual joint war games, small numbers of US Special Forces troops now play advisory roles to Filipino troops in southern flashpoints known for their Islamic militant activity.

Cruz said Brunei was also interested in entering a similar agreement with the Philippines.

Australia has been stepping up counter-terrorism efforts with its Asian neighbors since the October 2002 Bali bombings in Indonesia that killed some 200 people, many of them Australian tourists.