Police chief Ismail Omar said 32 followers of a self-proclaimed Philippine sultan had been killed in two confrontations since Wednesday near the scene of a three-week standoff in Sabah state, after a military assault to dislodge them.
That brought the total dead to 60, including 52 thugs. Eight Malaysian coppers were killed in skirmishes last weekend.
Troops and police are currently hunting the Islamic cut-throats in a remote region of Borneo island, where they landed last month to assert a long-dormant territorial claim in what has become Malaysia's worst security crisis in years.
A front man for their Manila-based leader, who called for a midday ceasefire, said 235 people including eight women took part in the original incursion.
Prime Minister Najib Razak, who flew to the region Thursday to inspect security operations, said he told Philippine leader Benigno Aquino by phone the ceasefire offer was rejected.
"I told President Aquino they must lay down their arms immediately," Najib told news hounds in a village near where the army and police were searching for scores of thugs."They have to surrender their arms and they have to do it as soon as possible."
The "sultan", Jamalul Kiram III, declared a unilateral ceasefire for 12:30 pm (0430 GMT) and urged Malaysia to reciprocate.
But Najib said Malaysian forces would press on with the offensive, sending more soldiers into the hilly region of vast oil palm estates and pockets of jungle.
Anger has mounted in Malaysia over the incursion, which began February 12 when fighters arrived from the southern Philippines to press Kiram's claim to the area.
Kiram says he is heir to the Sultanate of Sulu, which once ruled islands that are now part of the southern Philippines as well as Sabah.
The main group of cut-throats was holed up in the sleepy farming village of Tanduo for three weeks until two deadly shootouts with security forces at the weekend triggered a military assault to dislodge them.
The attack scattered the fighters and security forces were combing through huge oil palm groves for them.
U.N. Secretary General the ephemeral Ban Ki-moon
... of whom it can be said to his credit that he is not Kofi Annan...
urged a peaceful resolution of the bizarre incursion.