LTTE rebels had pounded the Muttur area since 2 a.m. local time (2000 GMT, Tuesday) on Wednesday with mortar and artillery fire and the government security forces responded with firepower, he added.

    The rebels claimed they had overrun three military camps in surrounding Muttur, however, the claim was denied by the military.

    Keheliya Rambukwella, the government's defense spokesman, said the military had taken full control of the town and the rebels who had been fighting from pockets in the town had begun to retreat.

    The rebel attack in Muttur came as the government troops advanced in to the rebel- held Verugalaru in order to wrest control from the Tigers a sluice gate in an irrigation canal. The sluice gate was closed down by the Tigers on July 20.

    But prime minister Minister Ratnasiri Wickremanayake said Wednesday that the government had not declared war against the Tamil Tigers, adding that security in the capital's economic and defense installations had been beefed up in the light of more clashes.

    Some 2,600 families have been displaced in the eastern town of Muttur Wednesday due to the heavy battles. Spokesman Rambukwella said, "We are worried about civilian casualties," adding that the military was refraining from using its heaviest weapons to protect townspeople."

    Meanwhile, some aid workers said it is difficult for them to reach the casualties. Muttur seems to have fallen, with civilians sheltering in churches, mosques and education centers, they said, "it is too risky for aid staff to head in."

    Norwegian envoy Jon Hanssen-Bauer, who is scheduled to arrive in Sri Lanka on Friday, is going to meet with Sri Lankan government and rebel leaders in an effort to settle the dispute, Norwegian embassy spokesman Tom Knappskog said Thursday. Enditem

    (Agencies)