Civilians waved flags from their windows to show they are not combatants.
Army tanks packed with soldiers rolled into the southern Philippine.
At least 44 people, majority suspected militants, have been killed.
Philippines President Rodrigo Duterte, giving a pep talk to his troops in the country's restive south, exhorted the soldiers to go all out in fighting Islamic militants, but he said he's willing to sit down with his enemies and talk peace.
Thousands of people have since fled the mainly Muslim city in Lanao del Sur province on the southern island of Mindanao.
Convoys of vehicles packed with evacuees and protected by heavily armed soldiers streamed into nearby Iligan City. Duterte gave his troops a free hand to wrest control of Marawi.
"You can see that ISIS is here already", Duterte said in a speech Friday at a military camp near Marawi, referring to the militant group by another acronym, as officials said the insurgents were from multiple countries.
The military on Saturday said no civilians have been confirmed killed in air strikes targeting members of the terrorist Maute and Abu Sayyaf groups in Marawi City.
Presidential spokesman Ernesto Abella said Duterte's offer was made in the spirit of Ramadan.
Hapilon is still hiding out in the city under the protection of gunmen who are desperately trying to find a way to extricate him, said the Philippines' military chief, Gen. Eduardo Ano.
"They also have sympathisers from private armed groups", Herrera said. "We can not just pinpoint the particular spot".
The government says Hapilon has been the point man for ISIL in the Philippines and has been collaborating with the Maute leaders.
According to Padila, clearing operations are being conducted as exchange of firefights between military forces and the Maute group are still happening in certain parts of Marawi city.
"Together we pray for an end to terrorism that falsely claims to advance Islam and seeks to subjugate our land to the brutal IS", Abella said in a statement. "We have to finish this".
But Wadi also said he did not believe the vast majority of local Muslims supported an IS caliphate, nor the group's brutal tactics that include mass beheadings of opponents.
With much of Marawi a no-go zone, confusion reigned.
Romeo Enriquez, the still-living police Malabang chief, meanwhile said he has "shocked" to hear the president report him dead by decapitation. Mr. Enriquez has been in the job for about two months.
"One of the most troubling aspects of the aftermath of the Marawi siege is the rapid proliferation of fake news and deliberate disinformation", said Richard Javad Heydarian, an assistant professor of political science at Manila's De La Salle University.
Authorities are working to determine the condition of a Catholic priest and worshippers who were taken hostage by gunmen earlier this week.
Hapilon, a leader of another Mindanao-based rebel group Abu Sayyaf, pledged allegiance to Islamic State a year ago and has formed an alliance with Maute.
Calida said the Maute group and Islamic State were radicalizing young Muslims and the government was not the only target of their aggression.
The United States has placed a $5 million bounty on his head for alleged terrorist acts against American citizens.