An Indonesian armed separatist group is reportedly holding more than 1,300 people from five villages in the eastern province of Papua as hostages.

According to a Channel NewsAsia report, the Free Papua Movement (OPM) is preventing more than 1,000 people from leaving an area near the Grasberg copper and gold mine, which is operated by a US company, Freeport McMoRan.

Hundreds of Indonesian army personnel and police forces have been deployed to tackle the situation.

Officials hope to resolve the standoff through negotiations but insist they are also prepared for any escalation. "The Indonesian military will carry out a persuasive approach through negotiations so that there are no victims," said military chief Gatot Nurmantyo.

"We are also preparing 'hard' measures and need to do this very carefully," added the top military personnel. Many of those who were trapped inside the villages are traditional gold miners not hailing from the area.

The Free Papua Movement, a low-level insurgent group with 20-25 members and active since 2012, has been fighting for independence for Papua, a former Dutch colony.

"They have robbed the residents. There have been reports of rape and incidents of shooting at ambulances. (They) carry at least five to 10 weapons," General Tito Karnavian told a local media outlet, Kompas.com.

Indonesia's security minister has ordered law enforcement agencies to deal with the matter without any casualty. Wiranto, who only goes by the single name, said: "I have communicated with the local police and military chief and as well as with other security organizations there to solve the issue well without noise. That is what we want."

Meanwhile, according to an ABC News report, the separatists have disputed Indonesia's claim of holding villagers hostage.