MANILA (Reuters) - A 20-member team of U.S. special forces will go into the heartland of the Philippines' biggest Muslim rebel group to train Filipino troops in exercises planned this month, defense officials said on Monday.

The deployment, the first time U.S. troops have trained next to areas controlled by the Moro Islamic Liberation Front (MILF), has raised concerns of a rise in tension between the government and rebels fighting for an Islamic state on southern Mindanao island.

Washington sent 1,000 troops to western Mindanao in 2002 to help the Philippines flush out the Abu Sayyaf, a small but radical militant group with previous links to al Qaeda, but they stayed clear of MILF strongholds in central areas.

"The very reason why this is going to be held in Cotabato is because we would have the real type of environment where the students will be exposed to the real conditions on the ground," Edgardo Batenga, a defense undersecretary, told reporters.

U.S. and Philippine officials have said the exercises aim to train Filipino troops to use small, well-equipped teams against militants belonging to the Jemaah Islamiah network believed to use Mindanao as a training base.

The MILF denies allegations it shelters foreign militants and has offered to join forces with the government to capture members of JI as part a peace process being brokered by Malaysia.

A cease-fire in the three-decade-old conflict has broadly held since mid-2003.

Defense Secretary Eduardo Ermita said an army camp in the central Mindanao town of Carmen would provide the "perfect" training ground for small-unit, highly mobile operations.

The U.S. team will train about 160 soldiers from the army and marine corps in north Cotabato province for three weeks from July 26.

A spokesman for MILF, the largest of four homegrown Muslim rebel groups, said the movement was not concerned about the deployment but warned the government to stay off its turf.

"We have no quarrel with the Americans," Eid Kabalu told Reuters. "As long as we are not touched, we are not worried. But we have the right to defend ourselves in case they enter our territories."

Ermita said the American soldiers would not be allowed to leave camp in North Cotabato province and would not be engaged in any real combat during the training program.

He said the MILF leadership would be informed of the nature of the exercise, its general location and the size of the units involved.

"We will see to it that there would be no involvement of MILF forces on the ground," Ermita told reporters.

Carmen, the site of a huge Japanese-funded dam project to irrigate 600,000 farms, became a battleground in 1994 when MILF forces abducted 10 Korean engineers at the dam site.