Philippine authorities have arrested a founding member of the Al-Qaeda-linked Abu Sayyaf group blamed for some of the worst terror attacks in the region, security officials said on Sunday.

Ustadz Ahmadsali Asmad Badron, also known as Ammad or Hamad Ustadz Idris, was arrested on Saturday in the remote Tawi-Tawi islands in the southern Philippines.

Police criminal investigation regional chief Edgar Danao said Badron was one of the original members of Abu Sayyaf, which was founded in the 1990s using seed money from Al-Qaeda leader Osama bin Laden.

"Badron was among the trusted members of (Abu Sayyaf) who made millions of pesos in ransom money collected from their operations," Danao said.

Along with one of his cousins Badron worked alongside Galib Andang, a notorious Abu Sayyaf leader well known as "Commander Robot".

The group carried out a daring cross-border raid on a Malaysian resort in April 2000 and kidnapped dozens of foreign tourists.

It gained Abu Sayyaf international notoriety even as the hostages were freed in batches after millions were paid following ransom negotiations brokered by Libya, officials said.

The group has also been blamed for the worst extremist attacks in Philippine history including a ferry bombing in Manila in 2004 that killed more than 100 people.

Subsequent US-backed operations against Abu Sayyaf led to the killing of key leaders, while many others including Andang were arrested, but he was later killed in a botched attempt to escape in 2005.

While on the run, Badron allegedly helped foreign militants from another regional terror group, the Jemaah Islamiyah (JI), to hide in the southern Philippines.

The JI is blamed for a spate of deadly attacks in Indonesia, including the 2002 bombings on the Indonesian resort island of Bali that killed 202 people, mostly foreign tourists.

Badron's arrest came as troops were hunting down another Abu Sayyaf unit on the nearby Basilan island following clashes that left at least 10 soldiers dead last week.

While the government has repeatedly branded the Abu Sayyaf a spent force, experts say the group remains an enduring security threat with hundreds of fighters still active.