Maharudin Lunani, 48 and Samiun Maneu, 27, were saved following the gunbattle in the hinterlands of Panamao town in the Sulu province, some 337km across the Sulu Sea from Lahad Datu.

Easter Sabah security command chief Hazani Ghazali confirmed the men were rescued and were in the care of the Philippine armed forces.

The condition of the third hostage, Muhammad Farhan, 27, has yet to be known, he said.

The three men were kidnapped at 11.50am on Sept 23 and taken to Tawi-Tawi Island in the Southern Philippines despite a tight security cordon by Malaysian, Indonesian and Philippines forces.

Philippines ABC news reported that a soldier and a militant were killed in two firefights at dawn and that has allowed the troops to rescue the two Indonesians near Panamao town.

A regional Philippines commander Lt. Gen Cirilito Sobejana said troops were pursuing the militants in an effort to rescue the third Indonesian, believed to be Muhammad Farhan.

The number of abductions in the Sabah East Coast region have reduced in recent years due to tighter security by Esscom and the ongoing military offensive carried out by the Philippines armed forces against militants such as the Abu Sayaff in the Philippines Southern region, but they continue to occur.