The comments came a day after the foreign ministers of Britain and France, David Miliband and Bernard Kouchner, visited the island to push for an end to the fighting as well as for aid agency access to trapped civilians.
The president said he would not bow to the international pressure, and promised instead to "rescue" Tamil civilians. He also accused Western governments of being hypocrites.
"They are trying to preach to us about civilians. I tell them to go and see what they are doing in Iraq and Afghanistan," he said in a speech in the southern town of Embilipitiya.
"If I say we don't use heavy weapons, that means we don't. But these foreign envoys are prepared to believe the propaganda of a terrorist organisation," the president added, without naming specific people.
The president's influential brother, Defence Secretary Gotabhaya Rajapakse, told a local newspaper that the two foreign ministers were bluntly informed that the offensive would continue until the Tigers were wiped out.
He argued that any truce would only help the Tamil Tigers' founder and leader Velupillai Prabhakaran, 54, who is believed to be holed up with his last remaining fighters on the island's northeast coast.
"The time has come finally for Prabhakaran and other terrorist leaders to be captured dead or alive and the government will not stop until that end is achieved," he told The Island newspaper.
The Tigers have been driven back by a prolonged military onslaught designed to finish the rebels' 37-year armed campaign for an independent Tamil homeland.
A pro-rebel website reported Thursday that the Tigers had braced themselves for further bloodshed after the foreign ministers' trip failed to secure a ceasefire.
"(The) Sri Lanka army is expected to embark upon the worst phase of massacre any time soon in the narrow stretch of land," Tamilnet said, claiming 300 civilians were killed on Wednesday.
Such casualty claims are unverifiable as reporters and aid groups are not able to work freely in the area.
The United Nations has put the number of civilians trapped in the small patch of rebel-held territory at 50,000, while the government says it is less than 20,000.About 110,000 Tamils displaced by the violence have been detained in congested government-run camps, where food, water and medical shortages have been reported.