Air Attack

A "large number" of rebels also died and more than 100 troops were wounded in the clashes in northern Jaffna peninsula, an army statement said.

The rebels said 75 soldiers died and that 10 of their fighters were killed.

On Tuesday, the two sides finalised a date and venue for talks later this month - which the BBC's Dumeetha Luthra says are now hanging in the balance.

The Tigers have said they are currently considering their position but have not pulled out. The country's key backers have requested a cessation of hostilities before talks begin.

Artillery fire

Wednesday's casualty figures are among the highest the Sri Lankan military has endured in a single day's fighting since hostilities resumed earlier this year.

Fierce clashes between troops and rebels lasted up to 12 hours, with residents in the town of Jaffna saying they could hear the noise of heavy artillery in the distance.

An army statement said at least 113 injured soldiers were being evacuated for treatment after a lull in fighting.

"Ground troops confirmed that a large number of terrorist dead bodies were also found scattered around," it added.

The military said its forces had responded to rebel attacks with artillery and air raids against rebel gun positions.

For their part, the rebels accused the military of stepping up attacks first, saying troops had begun a "large-scale operation along the northern defence line".

"Our forces have repulsed their attacks. The bodies of more than 75 soldiers are scattered around in areas under our control," rebel military spokesman Rasaiah Ilanthiraiyan told the BBC Tamil service.

He said a soldier was captured by them and was identified as Samantha Weerasinghe of Gemunu watch.

Both sides maintain they are acting defensively, our correspondent says, and have retained the right to do so despite agreeing to resume discussions.

Talks

Sri Lanka has been close to peace talks before, only for them to fail at the last minute.

	Fighting in the north has led to thousands being displaced

On Tuesday, Norway's ambassador to Sri Lanka, Hans Brattskar, told the BBC that the rebels had confirmed they were ready to meet the government on 28 and 29 October in Switzerland.

However, he said the Tigers had told him they could reconsider their decision if the situation on the ground deteriorated.

Last week, the Sri Lankan government outlined plans for a 40% increase in defence spending for 2007, to cover increased weapons procurement and air strike costs.

Thousands of civilians have been caught up in the latest violence, in which hundreds of people have died this year.

The government says it wants to discuss substantive issues which would lead to a long-term solution.