The government, however, will continue its crackdown on suspected coup plotters as an investigation into the extent of the alleged conspiracy gets underway, officials stressed.
Mrs. Arroyo said she wants to lift her emergency declaration because "the government is determined to get back to its core mission: to strengthen the economy, eliminate poverty and focus on the people’s business."
"I will lift the state of national emergency at the earliest possible time," Mrs. Arroyo announced in a televised address.
She ordered Defense Secretary Avelino Cruz, Justice Secretary Raul Gonzalez as well as Philippine National Police (PNP) chief Director General Arturo Lomibao to review the situation and submit their recommendations within three days, saying she expects "significant progress in the coming days."
Her announcement came following warnings from her economic advisers that prolonging the state of emergency might hurt the fragile economy.
Gonzalez and Lomibao, however, said they were not ready to recommend lifting the proclamation as it was not clear if the threat to the administration had been eliminated.
Executive Secretary Eduardo Ermita and Gonzalez said there may be more arrests as the extent of the alleged coup plot appears to be wider than earlier believed.
"We have continuous monitoring of the situation through intelligence work and are taking appropriate steps to prevent the situation from getting out of hand," Ermita told a press briefing.
"By this time, we would have started some investigations. You cannot stop that in the middle, you have to proceed with that. And in the process of proceeding through that investigation, names and incidents may come up that we have not anticipated at this point in time," Gonzalez said. "There are sleepers, you don’t know what they are up to."
Mrs. Arroyo issued Proclamation No. 1017 declaring a "state of national emergency" last Friday to counter what she said was a "tactical alliance" of communist rebels, "military adventurists" and elements in the political opposition aimed at toppling her.
Mrs. Arroyo, under intense fire from critics for her declaration and its alleged curtailment of civil liberties, justified Proclamation 1017 by saying the government had to act to secure the state’s safety.
"The government moved to secure the safety and peace of the republic and we will end the state of emergency once we fully achieve these guidelines on destabilization, armed forces and the rule of law," she said.
She said Gonzalez will submit a report on moves to destabilize the government, Cruz will report on control of the military, and Lomibao will advise on the peace and order situation.
"I will lift the state of emergency once all three officials convince me that we are totally in control of the situation," Mrs. Arroyo said.
The coup was to have coincided with a mass rally last Saturday to mark the 20th anniversary of the EDSA I people power revolt that toppled late dictator Ferdinand Marcos.
Opposition activists and civil libertarians claim her proclamation virtually imposed martial law and say they worry that a string of warrantless arrests, a ban on rallies and a raid on a critical newspaper are jeopardizing political freedoms and only fanning unrest.
Last Tuesday, the Supreme Court deferred a decision on at least four petitions challenging Proclamation 1017 and set oral arguments next Tuesday.
Administration officials rejected accusations that Mrs. Arroyo was clamping down on civil liberties.
"She is taking stock of the situation in a deliberate manner unperturbed by threats and pressure; and she will only make a well-thought-out decision based on the facts and the vital factors impinging on the democratic and international milieu," Bunye said in a statement.
He insisted that the "specter of a creeping martial law is fiction; and the images of normalcy in everyday life for the average Filipino (are) clear as day."
The United States is monitoring the situation in the Philippines closely and expects the state of emergency to be lifted as soon as the situation normalizes, a US Embassy spokesman said.
"We expect the state of emergency to be lifted as soon as the situation returns to normal," embassy spokesman Matthew Lussenhop said. "We’re monitoring the situation closely, but it’s not up to us to declare when things are back to normal."
US Assistant Secretary of State Christopher Hill and Mrs. Arroyo discussed the emergency declaration during a meeting Tuesday at Malacañang, Lussenhop said. He would not elaborate.
Hill arrived in Manila on Tuesday for a previously scheduled three-day visit. He was expected to hold a news conference today. Lussenhop declined to comment on whether Washington had urged Mrs. Arroyo to lift the emergency declaration.
The Cabinet met last Tuesday to review the crisis and decided to keep the emergency declaration in place, despite Mrs. Arroyo’s economic advisers saying it was damaging the country’s image.
"We have to evaluate the security situation and the economic situation in the country, the effects of this proclamation on the economy, foreign investment and our allies," Gonzalez said. "I think the situation has leveled off, but to say whether we have or not neutralized the people who want to topple the government, I am not prepared to answer at this point.
"As of this time, I am not prepared to suggest a lifting," he added.
Lomibao said the situation in the country remains "very volatile."
"The situation is still fluid as of the moment. And I cannot definitely say if the situation has gone back to completely normal. So we should give a little time for us to assess the situation," he told reporters.
But Tarlac Rep. Jesli Lapuz said an "extended abnormal status is not good for the markets. It is best for the government to take cognizance and take prompt steps to stabilize the situation."
Earlier, Bunye said the state of national emergency would be extended after a weekend standoff with Philippine Marines renewed political tensions. Mrs. Arroyo’s advisers had recommended last Sunday that she lift the emergency declaration.
However, political crisis appeared to deepen last Sunday when a highly decorated combat veteran, Col. Ariel Querubin, sacked as commander of a Marine brigade last Friday, led at least 100 armed troops in a defiant stand at the Marines headquarters.
They were protesting the sacking of their commandant, Maj. Gen. Renato Miranda, who had apparently taken the heat for his subordinate’s political actions.
Querubin was sacked after telling his superior that he planned to lead his men, unarmed, to an opposition rally calling for Mrs. Arroyo’s resignation.
But after several hours of talks Querubin emerged with the new commandant, Brig. Gen. Nelson Allaga, who proclaimed the Marine Corps intact. The troops returned to barracks.
House leaders allied with Mrs. Arroyo praised her pledge to lift the emergency declaration.
"The state of national emergency was meant to be temporary. Without it, the situation would have been worse," said House Majority Leader Prospero Nograles.
House Deputy Speaker for Mindanao Gerry Salapuddin said a "crucial time like this necessitates decisive action which may be unpopular but right." — With reports from AFP, AP, Jose Rodel Clapano, James Mananghaya, Christina Mendez, Mayen Jaymalin, Evelyn Macairan