Colombo : Heavy fighting erupted between government troops and Tamil rebels in north-eastern Sri Lanka Sunday, with pro-rebel media claiming of a large number of civilian casualties, but the military is denying the claims.

A medical doctor based in the area living under rebel control confirmed heavy fighting since Saturday evening and said he could hear exchanges of artillery in the Karaiyamullivaikal area, 395 kilometres north-east of the capital.

However, he could not confirm reports from the pro-rebel Tamilnet website claiming as many as 2,000 people were killed since Saturday.

Chief military spokesman Brigadier Udaya Nanayakkara denied the pro-rebel media reports and said 700 civilians were rescued by the army and brought into government-controlled areas on Sunday.

The Defence Ministry in a separate report said heavy combat took place amid stiff resistance on advancing troops, but that troops were able to breach the rebel defences and inflict heavy damage. But it did not mention any casualty figures.

"Intercepting LTTE (rebel) communication channels, Electronic Warfare sources confirmed that numbers of LTTE terrorists were killed during the fighting while many received injuries," it said.

The government also redefined an area known as the safety zone to enable civilians to gather before launching rescue operations.

The zone is limited to about 3 square kilometers, from an area of 6 square kilometers which the rebels and civilians are confined to.

According to military sources the government was set to step up military operations to rescue some 20,000 civilians held in the area and crush the rebels.

However, UN agencies say the number of civilians trapped in the area may be over 50,000.

The military says it is in the final phase of defeating the Liberation Tigers of Tamil Eelam (LTTE) who have been fighting for an independent homeland for minority Tamils in the north and eastern parts of the country. (dpa)