Sri Lankan troops continued their slog through mines and mortar fire towards a Tamil Tiger-held water supply on Tuesday, while jets hit rebel positions and a military transport ship was attacked.
The government accused the Liberation Tigers of Tamil Eelam (LTTE) of attempted ethnic cleansing through cutting off the water supply to some 50,000 people, but said they were still committed to a fading 2002 cease-fire.
The military said Tiger artillery, mortar launchers and gunboats attacked a ship entering Trincomalee port, north of where troops are battling to secure a rebel-held sluice gate in a dispute that has prompted the worst and longest violence since the truce.
"As our passenger ship carrying 854 soldiers was entering the harbour, she was fired on by LTTE mortars and artillery," a military spokesman said. "She is now safely in harbour and there are no reports of casualties."
The pro-rebel website Tamilnet reported a naval fast attack boat was sunk, the naval headquarters were hit and at least eight navy sailors killed. The military denied the claims, although admitted the occasional shell was being fired towards the naval base.
The rebels hold the southern edge of the harbour entrance and have used it for attacks before. The navy said three small Sea Tiger craft were sunk and three damaged, including explosives-packed speedboats piloted by suicide bombers.