Dozens of Tamil Tiger rebels infiltrated a small, government-held town during fierce fighting in northeastern Sri Lanka, and soldiers were trying to flush them out, a government spokesman said on Thursday.
A Defence Ministry statement said government forces killed 40 Tiger rebels and wounded 70 on Wednesday in heavy fighting around the strategic northeastern port of Trincomalee and the small town of Muttur, about one hour east by sea.
But dozens of the rebels managed to enter the Muslim-majority town of Muttur, where they holed up in private homes and defied soldiers' efforts to force them out, chief government spokesman Keheliya Rambukwella said.
"Overnight, the terrorists managed to get inside and are hiding in homes of residents," Rambukwella said, although he added that, "The town is under our control." "We are worried about civilian casualties," Rambukwella said, adding that the military was refraining from using its heaviest weapons to protect townspeople.
Rambukwella said the government troops were guarding the area's main telecommunication centre, which came under fire from the rebels on Thursday.
"The centre is in our control, but is being threatened by the terrorists."
Though Muttur, like many northeastern towns, is under government control, the rebels operate from adjoining villages and jungle areas.
The pro-rebel website TamilNet suggested that the rebels had the upper hand in Muttur.
It quoted residents as saying intense fighting was under way in Muttur as "hundreds of heavily armed (Tamil Tigers) who have taken control of the town centre laid siege to four Sri Lanka army camps on its periphery."
Some residents have taken shelter in mosques and churches, TamilNet said.
The clashes have been among the fiercest since a 2002 ceasefire deal was signed between the government and the Tigers.
The latest violence was sparked by a rebel move last month to shut down a reservoir and cut off water to nearby government-held villages.
The military responded with airstrikes and a ground assault.
Norwegian envoy Jon Hanssen-Bauer, who is scheduled to arrive in Sri Lanka on Friday, was to meet with Sri Lankan government and rebel leaders in an effort to settle the dispute, Norwegian embassy spokesman Tom Knappskog said on Thursday.