The key rebel group behind a 16-year insurgency in Thailand's Muslim-majority south has met the kingdom's head negotiator for the first official meeting in their peace talks.

Observers see the dialogue as the best hope of ending a conflict which has left thousands dead in Thailand's three southernmost provinces.

The region has been in the grip of a simmering insurgency since 2004, with clashes between Malay-Muslim rebels and the Buddhist-majority Thai state claiming more than 7,000 lives, mostly civilians.

The main rebel group believed to be behind the guerilla attacks -- the Barisan Revolusi Nasional (BRN) -- has long refused peace talks with Thai officials.

They claim to be fighting for independence after Thailand annexed the three southern provinces -- Yala, Pattani, and Narathiwat -- over a century ago.

But this week marked a warming in relations as the two sides held their first official meeting on Monday, with Malaysia as a facilitator.

The BRN said in a statement Tuesday that after years of back-channelling the two parties had agreed to "resolve armed conflicts... by means of political resolution".

The rebel group added that "observers from overseas" had attended Monday's meeting.

Thailand's National Security Council also released a statement saying they are "ready to work with every stakeholder".

The rebel group has long insisted the talks be overseen by international mediators, which the Thai state has staunchly opposed, bringing the negotiation process to a stuttering halt in 2014.

Since then, only MARA Patani -- an umbrella organisation representing other insurgent factions -- has taken part, and progress has been slow.

A photo from Monday's meeting shows Wanlop Rugsanaoh, head of Thailand's Peace Dialogue Panel, and BRN representative Anas Abdulrahman clasping hands with former Malaysian police inspector-general Abdul Rahim Noor in the middle.

"They have agreed to resolve the issues through peace and not to fight. It can be done," Abdul Rahim Noor told AFP late Tuesday.

The two sides agreed another meeting will be held next month, he added.

Calling this the "best hope" for the years-long conflict, Matthew Wheeler of International Crisis Group cautioned that a long journey remains.

"As difficult as the process has been up to this point, the most difficult work remains to be done," he told AFP.

Thailand