Sri Lankan troops have made fresh advances into the small patch of territory held by the Tamil Tigers, the defence ministry said on Tuesday.
A statement said government forces advanced 800 metres (yards) during fighting on Monday, cutting deeper into the roughly four square kilometres (1.5 square miles) of coastal jungle in rebel hands.
The report of fresh fighting came amid mounting international alarm over large-scale civilian deaths over the weekend due to shelling by the Sri Lankan army.
The United Nations described the violence as a "bloodbath" with Secretary General Ban Ki-moon calling for an immediate end to the fighting.
Sri Lankan leaders have refused international calls for a ceasefire, despite reports from the UN last month saying up to 6,500 civilians may have been killed and 14,000 wounded in fighting since January.
Sri Lankan officials have blamed the Liberation Tigers of Tamil Eelam (LTTE) for the civilian deaths.