Allan Rock, the UN envoy, accused elements within the military of helping to abduct children to turn them into soldiers for a renegade rebel faction.
Keheliya Rambukwella, the government defence spokesman, however, expressed his disappointment over the damning statement.
"The co-chairs would have been influenced by Allan Rock and the SLMM [Sri Lanka Monitoring Mission] and that is misleading," he said.
Rambukwella said neither Rock nor the SLMM - who have both been vilified by government officials and state-run media - had provided the government with proof of troop involvement in abuses, despite requests.
While the Tigers have violated a battered truce thousands of times since it was hammered out in 2002, monitors cite an alarming rise in violations by the military this year.
"Obviously on the basis of national security, we have to react on certain issues. That can be ... systematic erosion or violation of the ceasefire," Rambukwella said.
"But this becomes inevitable unless the LTTE change their stance of terror."
More than 3,000 civilians, troops and rebel fighters have been killed this year and many fear a conflict that has killed more than 67,000 people since 1983 could escalate.
So far, most of the violence is confined to the northeast, where the Tigers run a de facto state they want recognised as a separate homeland for minority ethnic Tamils.
Human rights violations
The violence came after the main donors to Sri Lanka - the US, Japan, the EU and Norway - accused the government and Tamil Tigers of "systematic ceasefire violations".
"The co-chairs view with alarm the rising level of violence in Sri Lanka that has led to significant loss of life and widespread human rights violations," the donors said in a statement issued out of Washington.
"The co-chairs condemn the continued and systematic ceasefire violations by government of Sri Lanka and LTTE," it said.
"The co-chairs particularly condemn the LTTE for initiating hostilities from heavily populated areas and the government of Sri Lanka for firing into such vulnerable areas and killing and wounding innocent civilians."
The donors also called on both sides to set up demilitarised zones to protect civilians, and appealed to the government to reopen the main north-south highway that runs through rebel territory to the northern army-held Jaffna peninsula.
The government has offered to reopen the A9 highway for a one-off aid convoy to drive to Jaffna, but the Tigers say that is not good enough and want the road - seen as a key revenue source thanks to levies charged - reopened permanently.