Suspected Tamil Tiger rebels shot dead four civilians in eastern Sri Lanka on Thursday, the defence ministry said, as the military reported killing three rebels.
Liberation Tigers of Tamil Eelam (LTTE) gunmen opened fire on farmers in Polonnaruwa district as they travelled to sell their rice crops, the ministry said.
"It is reported that four villagers have been killed in the incident," a ministry statement said.
The attack came as the military said they killed three suspected rebels along the de facto border in northern Sri Lanka after the air force bombed guerrilla targets in the northeast.
Security forces shot dead three men who tried to infiltrate the army's defence lines at Muhamalai in the Jaffna peninsula on Wednesday night, they said.
The shooting came hours after the air force bombed what it called the main Sea Tiger headquarters of the LTTE, a claim rejected by the rebels.
The LTTE said two civilians were killed and four more were wounded in the aerial bombardment in Mullaitivu district.
A first air raid hit the "White Pigeon" charity which helps victims of landmines, the LTTE said, adding that the civilians died in further aerial bombing in the same area.
The Sri Lankan air force suffered a humiliating blow last week when Tiger light aircraft bombed its main base next to the island's only international airport and managed to escape unchallenged.
The LTTE has waged a 35-year campaign for independence that has claimed more than 60,000 lives.
More than 4,000 people have been killed in the latest upsurge of fighting that began in December 2005.