BANDAR SERI BEGAWAN (Reuters) - The Philippines hit out at China on Sunday over the "increasing militarization" of the South China Sea as tensions between the neighbors flared amid slow-moving regional efforts to forge a compromise over one of Asia's naval flashpoints.

The rebuke by Philippine Foreign Minister Albert del Rosario at a regional summit in Brunei came a day after China's state media warned of an inevitable "counterstrike" against the Philippines if it continued to provoke Beijing.

Friction between China and the Philippines over disputed territories in the oil and gas rich sea has surged since last year due to several naval stand-offs and fraying diplomatic efforts to forge a regional agreement on maritime conduct.

The 10-member Association of Southeast Asian Nations (ASEAN) hopes to persuade Beijing to join talks on a proposed Code of Conduct (CoC) this year, but China's naval action has alarmed some nations, particularly the Philippines and Vietnam.

Most recently, the Philippines accused China of encroaching on its territory after three Chinese ships converged just 5 nautical miles from a small reef where the Philippines maintains a small military force.

This month the Philippines moved more troops and supplies to the reef, which is within its 200-nautical mile economic exclusion zone. China, which does not recognize the zone, condemned it as an "illegal occupation".

Del Rosario said the "massive" presence of Chinese military and paramilitary ships at the Second Thomas shoal and at another reef called the Scarborough Shoal - the site of a tense standoff last year - was a threat to regional peace.

"The statement on counterstrike is an irresponsible one. We condemn any threats of use of force," Del Rosario told reporters in Brunei following a meeting of ASEAN foreign ministers.

He said the ministers had discussed China's ongoing "illegal" occupation of the Scarborough Shoal, which is just 124 nautical miles of the Philippine coast.

EXPANSIVE CLAIMS

China and the Philippines have accused each other of flouting a confidence-building 2002 "declaration of conduct" agreed by ASEAN and Beijing. China has appeared in little hurry to begin negotiations on a more comprehensive deal.

"A declaration of conduct is the foundation we need to lay before we can start working on a CoC," Chinese Foreign Minister Wang Yi told reporters in Brunei.

"Both sides have to create that basis before we can move forward. It is a process, a step-by-step process."

The worsening dispute comes as Philippine-ally the United States, which says it has a national interest in freedom of navigation in the South China Sea, shifts its military attention back to Asia. Secretary of State John Kerry is due to arrive in Brunei on Monday to join the regional summit.

Critics say China is intent on cementing its vast claims over the sea through its superior and growing naval might, and has little interest in rushing to agree a code of conduct with ASEAN nations, four of which have competing claims.

Divisions among ASEAN over the maritime dispute burst into the open a year ago when a summit chaired by Chinese ally Cambodia failed to issue a closing communique for the first time in the group's 45-year history.