The Indian Government says it has agreed to supply Sri Lanka with 300,000 tonnes of wheat.

Whatever help we want, they [India] will give us

Ranil Wickramasinghe

Announcing the move, Indian Finance Minister Yashwant Sinha said Delhi would also approve a credit line of $100m for Indian goods to the island.

The trade accords follow talks in Delhi between Mr Sinha and visiting Sri Lankan Prime Minister Ranil Wickramasinghe, who is in India to secure long-term backing for his country's peace process.

Delhi also repeated its demand for the extradition of the leader of Sri Lanka's Tamil Tiger rebels, who allegedly ordered the 1991 assassination of former Indian Prime Minister Rajiv Gandhi.

The Tigers want a Tamil homeland

The demand for Velupillai Prabhakaran's extradition was made in 1995.

"It continues to be in operational. There is no change in the situation," a Foreign Ministry spokeswoman told reporters on Monday.

Mr Wickramasinghe's visit comes ahead of landmark peace talks with the Tamil Tigers, aimed at ending decades of bloody ethnic conflict.

India's support is seen as vital for the success of any peace deal given the country's influence over its smaller neighbour.

Rebel ban

The Sri Lankan prime minister needs vital economic aide and trade concessions from India to boost the reconstruction of the island's war-ravaged areas as well as to lift the economy from its worst slump in 50 years.

His government has said it wants people to receive an immediate peace dividend by making essentials more affordable.

Sri Lankan PM: Discussing rebel ban

But prices have been rising ever since a ceasefire accord was signed with the rebels three months ago.

"I need New Delhi's blessings," Mr Wickramasinghe said, but declined comment on the extradition demand.

He is expected to discuss a proposed lifting of Sri Lanka's ban on the Tigers when he meets Indian Prime Minister Atal Behari Vajpayee on Tuesday.

The Tigers want the ban lifted at home before they enter peace talks with the government.

Delhi once backed the Tamil Tigers, but outlawed them when a Tiger suicide bomber killed Rajiv Gandhi.

Sri Lanka is keen that a de-proscription at home will not automatically lead to the lifting of the ban on the Tamil Tigers abroad, where they are outlawed in several countries, including Britain and the US.