The hostages were moved into the township of Talipao on Jolo island, chief government negotiator Robert Aventajado said. The area is a stronghold of the Abu Sayyaf separatists holding them and the location of the talks that had been planned for Friday.
But, a mistake in army orders brought troops too close to the meeting site, agitating the rebels, who separated themselves into several groups, government negotiator Farouk Hussein said.
The military activity "caused some skepticism on the other side," Hussein said.
An envoy was sent to reassure them, but by the time they were all contacted it was too late in the day to begin, Aventajado said.
"I guess tomorrow is the D-Day. We can't force the issue here," he said.
Skirmishes between the rebels and troops, changes in the government negotiating team, and the need for security arrangements on volatile Jolo have delayed formal talks.
Hostages have complained over the slow pace of efforts to free them. The Abu Sayyaf's Commander Robot has said that the length of the hostages' stay was up to the government.
The government announced Friday that instead of first seeking the release of two ailing hostages, the government will seek to free the entire group all at once "so there will just be one series of negotiations," Aventajado said.
The group's formal demands so far include creation of an independent Islamic state something President Joseph Estrada has repeatedly refused to consider and the formation of an international commission to examine the plight of Philippine Muslims in nearby Malaysia.
Some of the separatists demands are "doable," and will be discussed, while others will be flatly rejected, Aventajado said.
"When they raise them, that's when we will tell them, because we could not promise anything that we could not grant," he said.
Informally, the Abu Sayyaf have asked for as much as $2 million and for aid to build schools, health centers, water systems and livelihood projects such as seaweed farming, officials said.
The change is because the conditions of the two hostages, a German woman and a French man, have improved, Aventajado said.
The hostages three Germans, two French, two Finns, two South Africans, a Lebanese, nine Malaysians and two Filipinos were kidnapped from a Malaysian resort on April 23 and taken to Jolo, about an hour away.
The Abu Sayyaf is the smaller and more radical of two guerrilla groups fighting for an independent Islamic state in the impoverished southern Philippines.
The kidnapping is part of a wave of recent violence in the southern Philippines triggered by fighting between Muslim rebels and government troops that has displaced more than 200,000 people.
The fighting has been limited to the southern Mindanao region, home of the mostly Catholic Philippines' Muslim minority, but several bombs have struck the capital, Manila, since the rebels threatened to target large cities. The latest, which struck the country's biggest mall on Sunday, killed one person.
The larger rebel group, the Moro Islamic Liberation Front, denied responsibility.
Separately, a rocket-propelled grenade was launched at a fuel depot in a southern General Santos City early Friday, but it caused little damage and no injuries, the military said.
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