A soldier and two rebels died in north-eastern Sri Lanka following a gun battle between the Tamil Tiger rebels and the government military patrol, the Defence Ministry said on Monday.
The attack occurred in Muttur near the port city of Trincomalee, 230 kilometres from Colombo, Brigadier Prasad Samarasinghe said.
The LTTE is threatening to scuttle a 2002 ceasefire deal and plunge Sri Lanka back into civil war.
"Our patrol spotted a van and they asked the vehicle to stop, but it did not," Samarasinghe said. "Our troops were fired at from inside the van, killing one soldier."
The troops fired back, killing two rebels, Samarasinghe added.
A machine gun and a T-56 automatic rifle were recovered from the dead rebels, Samarasinghe said.
In a separate development, the bodies of two men abducted on Sunday were found with gunshot wounds in a northern town, TamilNet, a pro-rebel website, reported.