Witnesses said that after the photos were taken some of the dead were stripped and their naked bodies piled into the back of a tractor trailer to be driven to a mortuary in the northern district of Anuradhapura.
Several journalists saw the bodies on the way to the mortuary after hearing rumours and the photographs were widely circulated and published in one local newspaper.
The Liberation Tigers of Tamil Eelam (LTTE) said they expected the corpses to be returned to them through the International Committee of the Red Cross (ICRC).
The military has denied any of the bodies were naked, and said the pictures had been doctored.
Brigadier Udaya Nanayakkara, a military spokesman, on Wednesday said: "Somebody has taken [those photographs] to tarnish the image of the [armed forces]. We are professional soldiers. We do not want to do [things] like that.
"I can assure you we wrapped all those bodies in black polythene bags ... and sent it to the hospital. Some photographer who is interested in tarnishing the image of the army has done this purposely."
"It's not a real photo. It's a made up one."
|"They have broken not only the Geneva Convention, but also norms observed by decent militaries all over the world"|
Rasiah Ilanthiraiyan, Tamil Tiger spokesman
The LTTE sent out a statement on Wednesday condemning the incident as a violation of the Geneva Convention.
"They have broken not only the Geneva Convention, but also norms observed by decent militaries all over the world," Rasiah Ilanthiraiyan, a Tiger military spokesman, said by telephone from the northern separatist stronghold of Kilinochchi.
The LTTE said 21 Tiger suicide fighters were killed in Monday's pre-dawn assault.
Fourteen military personnel were killed, and the government said on Wednesday eight aircraft, including helicopters, a spy plane and training aircraft were destroyed - far more damage than the military initially reported.
Witnesses said the tractor trailers, used normally to collect garbage, were accompanied by military personnel and stopped for several minutes at a junction where a crowd of dozens of people had gathered in the rain as word of the trip to the mortuary got around.
The hospital mortuary, where the bodies were being taken, was just 100m away and there was no traffic reported that could have obstructed the vehicle.
"The bodies were taken from the camp to the mortuary. One tractor trailer contained naked bodies, bodies in the other were in plastic bags," said a local journalist present at the scene said.
"I came to a spot along the route where people had congregated to wait for the bodies, and the tractors then came and stopped so the crowd could look," the journalist said.
Police said forensic tests were carried out on the bodies and DNA samples taken to establish their identities.
"We buried them in individual burial plots," said a police officer in Anuradhapura, a major tourist spot.
According to an opposition website, the corpses were put on display to "prevent the mentality of defeat from entering the public mindset in the aftermath of this major military debacle".
Monday's attack in the north, where renewed civil war is now concentrated after troops captured swathes of Tiger territory in the east of the island, comes after a series of clashes that have killed around 5,000 people since early 2006.
Nearly 70,000 people have been killed since the war began in 1983, and while the military has had the upper hand in recent months, analysts see no clear winner on the horizon and say the conflict could rumble on for years.