YENAGOA, Nigeria (Reuters) - Nigeria is deploying troops into strategic positions in the Niger Delta to prepare to use force against militants if peace talks fail, defense chiefs said on Friday.

Last week the government said it was talking to militants who have attacked oil and gas facilities in the main oil producing region in recent months, cutting crude production by 700,000 barrels a day, pushing Nigeria behind Angola to now make it Africa's second producer.

"We have allowed the ongoing dialogue between the federal government and the militants. Our troops are in position. My message to the militants is to ensure they go to the negotiation table," the chief of defense staff, General Gabriel Olonisakin, told reporters during a visit to the state governor.

On the possibility of using force if talks between the government and militants break down, Minister of Defence Mansur Dan-Ali, said: "It cannot be ruled out."

Crude sales make up about 70 percent of government revenue and the attacks have deepened an economic crisis brought on by low global oil prices. The militants say they want a greater share of Nigeria's oil wealth to go to the impoverished region.

Dan-Ali said local people would work alongside troops as part of a grassroots community security force, along the lines of an approach used to fight the Islamist group Boko Haram in the northeast.

"We will fuse them into the new security infrastructure for the region," he said.

In June, government officials said a one-month ceasefire had been reached. But Niger Delta Avengers, the group that has claimed responsibility for the majority of attacks dating back to January, said it had not agreed a truce.

Since then the group has said it would not take part in talks unless international mediators were involved.

(Reporting by Tife Owolabi; Writing by Alexis Akwagyiram; Editing by Robin Pomeroy)