Tamil Tigers chief Velupillai Prabhakaran is trapped in a small coastal strip, Sri Lankan Prime Minister Ratnasiri Wickremanayake said on Tuesday.
He also told parliament that there would not be any let up in the military campaign against the Liberation Tigers of Tamil Eelam (LTTE) despite persisting international pressure for a pause in fighting.
"According to intelligence reports, Prabhakaran is in a four-sq km area in Mullaitivu district," Shri FM radio quoted Wickremanayake as saying.
He was speaking during the monthly debate for the extension of the emergency regulation.
"The government will under no circumstances enter into a ceasefire even though there is mounting international pressure to have a halt in the offensive and save Prabhakaran," the prime minister said.
The Sri Lankan parliament approved the extension of the emergency with 88 members voting for it and 14 members voting against.
The defence ministry said on Tuesday that the troops have cornered the LTTE in a small strip of land and were now "surging in three frontal ground maneuvers to rescue civilians held hostage by the LTTE at gunpoint.
"The troops are advancing with utmost restraint into the remaining swathe of the NFZ (No-Fire-Zone), avoiding any form of civilian casualties despite continuous and provocative LTTE mortar and direct roll artillery barrages," it said.
According to government statistics, nearly 200,000 people have fled the war zone and reached government-held areas since the start of this year.
They are housed in refugee camps and welfare centers.
The LTTE had been fighting to carve out a separate state in the northeast of Sri Lanka for over a quarter century.