US President Barack Obama is set to dive into the tumultuous diplomatic waters of the South China Sea on Tuesday at a summit in which rival claims to the strategically vital area have dominated.

Obama is widely expected to express concerns about the disputes between China and its Southeast Asian neighbours, which have stoked tensions across the region this year and hampered efforts to foster economic co-operation.

Obama and Chinese Premier Wen Jiabao are among the leaders of 18 nations in the Cambodian capital of Phnom Penh for the two-day East Asia Summit.

Repeating a long-held Chinese position, Wen insisted on Monday that the disputes should not be "internationalised" and discussed at multilateral events such as the summit.

China, which claims sovereignty over virtually all of the sea, prefers to negotiate directly with its neighbours from the 10-member Association of Southeast Asian Nations (ASEAN).

In a meeting on Monday, Obama and ASEAN leaders agreed to support a regional code of conduct to manage disputes over claims in the sea, said a joint US-ASEAN communique.

ASEAN members Vietnam, the Philippines, Malaysia and Brunei, as well as Taiwan, also have claims to parts of the sea, which is home to some of the world's most important shipping lanes and believed to be rich in fossil fuels.

The rival claims have for decades made the sea a powder keg issue in the region. Chinese and Vietnamese forces engaged in clashes in 1974 and 1988 in which dozens of troops died.

After a long period of relative calm, tensions have risen over the past two years with the Philippines and Vietnam expressing concerns that China is becoming increasingly aggressive in staking its claim.

In one of the most serious incidents, Philippine and Chinese vessels became locked in a stand-off at a contested shoal in April.

The tensions have led to some bruising diplomatic confrontations this year and overshadowed some regional meetings where the participants typically prefer to focus on improving economic ties.

At the East Asia Summit, the first day was dominated by infighting over the issue among the ASEAN bloc.

Cambodia, this year's ASEAN chair and a close Chinese ally, said the 10 nations had agreed not to "internationalise" the disputes, thus giving an important diplomatic victory to China.

But the Philippines quickly denied that it had agreed, with President Benigno Aquino rebuking Cambodian Prime Minister Hun Sen during one of the meetings on Monday.

"How can there be a consensus? A consensus means 100 percent. How can there be a consensus when two of us are saying we're not with it," Philippine Foreign Secretary Albert del Rosario told reporters afterwards.

While he did not identify the other country opposing the agreement, diplomats said it was Vietnam.

The feud echoed unprecedented infighting at an ASEAN foreign ministers' meeting in Phnom Penh in July, which ended for the first time in the bloc's 45-year history without a joint communique.

The Philippines and Vietnam had wanted the communique to make specific reference to their disputes with China. But Cambodia blocked the moves.

Despite the tensions, leaders were expected to make progress on important economic issues on Tuesday.

ASEAN nations are set to officially launch negotiations for an enormous free trade pact with China, Japan, India, South Korea, Australia and New Zealand.

Trade ministers from China, Japan and South Korea are also likely to hold talks aimed at kick-starting three-way free trade negotiations.