Colombo - The army advanced into the last Tamil rebel strongholds in northern Sri Lanka as local and international concern about civilian casualties heightened Tuesday.

Fighting was reported from the Mullaitivu district, including an area surrounding a government hospital located in Pudukudirippu, 385 kilometres north-east of the capital where shelling was reported over the past two days.

"The rising civilian death toll in the conflict in Sri Lanka is a source of enormous distress for all those who want to see a peaceful future for the country," British Foreign Secretary David Miliband said.

He blamed the Liberation Tigers of Tamil Eelam (LTTE) for failing to respond positively to a government proposal of safe passage for civilians to move out of the conflict zones.

"The need for a humanitarian ceasefire that is fully respected by both sides is already urgent," Miliband said.

"I repeat my call to both the government and the LTTE to respond appropriately to the deteriorating humanitarian situation, in particular by allowing the wounded to receive the medical treatment they so urgently need; civilians to leave the conflict area; and access for humanitarian agencies."

The army said Tamil rebels were limited to an area of less than 275 square kilometres.

It also said a group of 75 civilians who fled the rebel-held zones had entered the army-controlled areas on Monday.

The military claimed the refugees said a large number of civilians had been drawn into the battlefront by the rebels across the declared no-fire zones.

But the army has denied journalists access to civilians escaping into the government-controlled areas.

Security forces were advancing from at least four directions to the last stronghold of the rebels, which included the hideout of rebel leader Velupillai Prabhkaran, officials said.

His whereabouts were unknown, but soldiers found an underground bunker Monday that was believed to be used by him.

Photographs purportedly taken of the hideout showed air-conditioners, sound-proof electricity generators, medical equipment to treat diabetes and oxygen cylinders.

Soldiers said they captured a compound covering two hectares fenced with barbed wire as high as 3 metres, and containing small cells of concrete with thin openings for ventilation.

All the metal doors to the chambers could be padlocked from the outside, the military said, presuming it was used to hold prisoners.

Government troops launched offensive operations against the rebels in August 2006 and have captured most rebel strongholds.

The military said 12,000 rebels and more than 3,500 soldiers have been killed, but there is no independent confirmation of death tolls.

In the capital city, preparations were underway to mark the 61th anniversary of independence from the British. The ceremony to be presided over by President Mahinda Rajapaksa will include a military parade with more than 4,000 soldiers on Wednesday. (dpa)