Since February 12 about 180 followers of self-proclaimed Filipino sultan, Jamalul Kiram III, have been in Sabah demanding recognition as the rightful owners of the Malaysian section of the island.
Malaysian security forces have sent fighter jets to quell what Prime Minister Najib Razak says is Malaysia's worst security crisis in years.
"The longer this invasion lasts, it is clear to the authorities that the invaders do not intend to leave Sabah," Mr Najib said.
"The government must take action to safeguard the dignity and sovereignty of the country as required by the people."
The government has sent seven army battalions to reclaim the area occupied by the armed group.
Mr Najjib says attempts at negotiation had not made any progress.
Witnesses reported seeing heavy military helicopters, three trucks filled with soldiers and six ambulances heading towards Tanduo, after at least two fighter jets launched an intense bombardment over the village early Tuesday.
Philippine President Benigno Aquino's spokesman, Ricky Carandang, says Manila did all it could to avoid a violent outcome in Sabah for the followers of the sultan .
"We've done everything we could to prevent this, but in the end, Kiram's people chose this path," he said.
The sultan said on Tuesday his gunmen would "fight to the last man".
"The crown prince, the royal security forces, and the many patriots who landed (in Sabah) voluntarily will fight to the last man protecting their ideals and aspirations," he said in Manila.