An airforce jet bombed a boatyard in Liberation Tigers of Tamil Eelam (LTTE) territory claiming it was used to build attack craft and launch attacks on the Sri Lankan Navy.
The pro-rebel Tamilnet website said it was a civilian yard and that two people had been injured when four bombs were dropped Friday but the military claimed it had destroyed a large number of rebel boats.
"There were 30 to 40 boats there and 90 percent of the fleet is destroyed and damaged," said defence ministry spokesman Major Upali Rajapakse.
Security forces consolidating their defence lines at Muhamalai town on the peninsula exchanged small arms fire in a clash Saturday with rebels, military officials said.
The clashes followed intense fighting that the political wing of the Tamil Tigers said on its website had left 141 civilians dead across the country in the week from August 8.
It claimed 753 civilians had been killed since a tottering ceasefire was signed in 2002 but which has since been marked by spike