A pro-rebel website said 12 Sri Lankan soldiers were killed and one captured in the battle on Friday in a village in the Batticaloa district in the east of the country. The statement also said that four Tamil Tigers died.
Brigadier Prasad Samarasinghe, a military spokesman, said 13 soldiers were reported missing and four were injured after rebels attacked them with mortars.
Samarasinghe denied that troops had knowingly entered the rebel-held region, saying the area did not have proper demarcations between the two sides.
Under a Norway-brokered ceasefire signed in 2002, both sides are prohibited from entering each other's territory with weapons.
The International Committee of the Red Cross said the rebels had agreed to hand over the bodies of the 12 dead soldiers on Saturday.
Earlier, sniper fire from suspected Tamil Tiger rebels killed one sailor and wounded another in the northeast of the island, a spokesman said.
More than 700 people have been
killed since December
The sailors were guarding a small naval base in Muttur - 230 km northeast of Colombo - when they were fired upon, navy spokesman Commander D.K.P. Dassanayake said.
The navy fired mortar shells at Tamil Tiger positions in the district of Trincomalee after the attack.
More than 700 people have been killed since December.
The Tamil Tigers - formally named the Liberation Tigers of Tamil Eelam - have fought the government since 1983 for a separate homeland for the country's 3.2 million ethnic Tamils, accusing the 14 million Sinhalese of discrimination.