The Tigers also threatened retaliation if air force bombing continued.

SP Thamilselvan, the Tigers' political wing leader, said the military attacks "would only lead Sri Lanka to a fatal war".

Sri Lankan jets pounded guerrilla targets on Thursday and Friday in response to an attack on a civilian bus that killed 64 people in the worst violence since a 2002 ceasefire, raising fears of an imminent return to civil war.

Thamilselvan denied the separatist group had anything to do with the bus bombing.

The government said on Saturday that the air strikes had ceased.

Clash

But officials said more than 40 people were dead or missing in a clash in the northeastern Mannar district, while suspected Tiger frogmen were captured and attempted suicide near the capital.

A military spokesman said eight Tiger boats were destroyed by government naval fire.

"They attacked the navy and police. We think 20-25 LTTE cadres are dead. Four navy sailors were also killed and one civilian succumbed to his wounds. Three naval craft were slightly damaged," the spokesman said.

But another military source said the government toll could be higher, with eight naval special forces troops missing.

"Still the government is committed to the peace process but... the government will take every possible step to safeguard national security"

Keheliya Rambukwella,
defence spokesman

Keheliya Rambukwella, a defence spokesman and minister, said: "Still the government is committed to the peace process but ... the government will take every possible step to safeguard national security."

The number of the dead could not be independently confirmed.

International truce monitors in the northwest Mannar district said they had heard heavy firing, much more serious than the hit-and-run attacks that have become commonplace in the last two months.

Divers caught

The military spokesman said two suspected guerrillas in diving gear were arrested when they came ashore near the town of Pamunugama, about 18km north of Colombo.

About 700 people have died so far in 2006, with violence soaring in early April, but so far largely confined to the island's north and east where the Tigers want to carve out a separate Tamil homeland.

Both sides have repeatedly said they want peace, but diplomats say neither has shown the flexibility needed to make concessions.

The Tigers walked out of talks in Norway without even meeting the government delegation this month.