"We have prevented a Madrid-level attack in the metropolis," President Gloria Macapagal Arroyo said, referring to the March 11 train bombings in Spain that killed 191 people.

The men also allegedly trained with Southeast Asia's Jemaah Islamiyah terror network, also tied to al-Qaida. Osama bin Laden's terrorist organization and a Morocco-based cell with possible connections to al-Qaida are the main focus of suspicion in the Madrid attacks.

The suspects in the Philippines were being held without bail on charges of multiple murder for alleged involvement in a rash of crimes, including the beheading of a California man taken hostage three years ago as well as a bombing that killed a U.S. soldier.

One suspect allegedly confessed he hid eight pounds of explosives in a TV set, then detonated it aboard a ferry that caught fire a month ago, killing over 100 people.

Arroyo said the confession will be part of an investigation into the disaster. The government earlier discounted the Abu Sayyaf's claim of responsibility, but testimony before a maritime board of inquiry has dovetailed with the group's description of where it said it planted a bomb. It would be the country's worst terror attack.

Arroyo is facing a tough battle to be re-elected when Filipinos go to the polls in May, and terrorism and crime are major issues. Speaking to reporters before taking a flight for a campaign stop, she said she was advised by officials not to disclose the arrests prematurely but went ahead anyway.

While thwarting terror attacks could give Arroyo a boost in a tight race — by contrast, the Madrid attacks influenced elections three days later that ousted the Spanish government — it was a double-sided sword for a strong supporter of the U.S. war against terror who continues to be plagued by terrorism.

The government has claimed the Abu Sayyaf is down to about 300 guerrillas from 1,000 four years ago, after Washington sent troops and instructors to help dislodge them from their Basilan island stronghold.

But the group clearly is still capable of attacks, and vowed more on Monday during a call to a radio station.

The Abu Sayyaf, which is on the U.S. terror group list and has fed and armed itself by carrying out kidnappings for ransom, wants militants released from Philippine jails and terror suspects freed from U.S. detention at Guantanamo Bay, Cuba. It also wants Christians to leave the mainly Muslim southern Philippines and foreign troops to leave the Arabian Peninsula.

The government on Tuesday doubled its reward for the capture of Abu Sayyaf leader Khadaffy Janjalani to $175,000. That is in addition to the $5 million offered by Washington for information leading to the capture of five Abu Sayyaf leaders, including Janjalani.

Communist rebels also have stepped up attacks recently even while reopening peace negotiations with the government.

Police identified the suspects, arrested since the weekend in the capital, as Alhamser Manatad Limbong, or "Kosovo," who allegedly beheaded American Guillermo Sobero in 2001 during a mass kidnapping and planted a bomb that killed a U.S. soldier in the southern city of Zamboanga in October 2002, and Redendo Cain Dellosa, who allegedly confessed to the ferry bombing.

Limbong, identified by police as leader of a Manila terror cell, was found with 80 pounds of TNT, Arroyo said.

"I think we have stopped a major disaster," National Security Adviser Norberto Gonzales said. "They were planning something big."

Also arrested were Radzmar Sangkula Jul, sometimes called Michael Saavendra, a suspect in the 2000 kidnapping of 53 people on Basilan island; and Abdulrasid Lim, a kidnapping suspect.

Defense Secretary Eduardo Ermita said the suspects had trained with the regional terror group Jemaah Islamiyah on southern Mindanao island. And police intelligence officer Chief Supt. Ismael Rafanan said the suspects had been under surveillance for weeks.

Arroyo said the evidence against the suspect was "strong and air tight."

"Let no one and no nation underestimate our determination to finish off the (Jemaah Islamiyah) and al-Qaida cells in our country," she said.