Terrorists seized Marawi, considered the Muslim capital of the largely Catholic Philippines, on May 23 in a bid to create an ISIS province, and over 100 remain holed up in the city despite intense military efforts to oust them.
Some of the extremists are teenagers who may have been recruited and trained to use guns when they were still children, said Brigadier-General Restituto Padilla, a military spokesman.
"We continuously get disturbing narratives from (escaped residents) that children as well as hostages are being employed in the firefight," Padilla told reporters in Manila.
Casualties among children and civilians forced to take up arms could not be ruled out, Padilla said.
"As disturbing as it is, our troops are doing their best to avoid any casualty among these children that are being employed," he said.
"But in the event... they bear arms and are involved in the fighting, there is nothing much that we can do. Similarly to the hostages who are being forced."
Shortly after seizing Marawi gunmen took at least a dozen hostages, including a Catholic priest. Some of the estimated 300 other civilians still trapped in the area may have also been taken captive, said Padilla.
The military earlier said civilians had been forced to help the gunmen by carrying supplies and ammunition, bearing their wounded and even helping them loot the city.
Nearly 400,000 civilians have fled their homes.
Daily air strikes and artillery barrages against terrorist snipers who control tall buildings have left Marawi's central business district a ghost town.
Philippine president Rodrigo Duterte last month vowed to "crush" the terrorists but several government-set deadlines to end the conflict have already been missed.
The fighting also prompted Duterte to declare martial law over the entire southern Philippines.
Padilla on Monday expressed hope that the fighting would soon be concluded.
"We continue to gain headway with our operations on the ground," he said.