BBC News Online takes a look at some of the key issues.

Why are these talks being held in Thailand?

With a long history of suspicion and mutual distrust both sides agreed to meet on a neutral venue and Thailand is one of the countries that has not banned the Tamil Tigers.

The second phase of talks are taking place at the Rose Garden hotel at Nakhon Pathom, a riverside resort on the outskirts of Bangkok.

The first phase, which took place between 16 and 18 September were held at a Thai naval base in Sattahip, 260 km (160 miles) southeast of Bangkok.

What's on the agenda?

The second phase of talks are expected to last four days and are likely to discuss issues such as security and rehabilitation of people displaced during the conflict.

In the first round, six weeks ago, the Tigers dropped their demand for a separate state and agreed to settle for regional autonomy.

Also on the agenda are the arrangements for a donors' conference for Sri Lanka due to be held in the Norwegian capital, Oslo, on 25 November.

According to some observers, the two sides are not likely to deliberate on core issues such as the future political and constitutional structure for the North-East in this first phase of talks.

What does the LTTE want?

The LTTE has been fighting since 1983 for a separate state in the island's north and east for the Tamils, who they say are discriminated against by the majority Sinhalese.

The government and rebels have tried peace talks several times, most recently in 1995, but they have always ended in renewed violence. That often led to fresh accusations by both sides of not being serious about peace.

What's the human and economic cost of the civil war?

The conflict has killed about 64,000 people, displaced one million and held back the island's growth and economic development.

Some estimates suggest that the government has spent up to �1 billion in defence spending, almost five percent of gross domestic product, in recent years.

Sri Lanka's once successful tourist industry has been badly hit due to the ethnic violence.

How have the talks been possible ?

Prime Minister Ranil Wickramasinghe won parliamentary elections last December, promising people peace with the Tamil Tigers.

Initially, he encountered some opposition from the powerful President Chandrika Kumartunga who accused him of giving too much to Tamil Tigers without receiving any pledge to give up violence.

Mr Wickramasinghe's keenness to make peace with the Tigers gave Norwegian peace efforts a big boost and they were able to broker a ceasefire in February this year.

Initial fears that the LTTE will use the ceasefire to consolidate its hold and might launch another military strike against government forces proved unfounded and consistent Norwegian pressure finally brought both sides to the negotiating table.