The military has also ordered troops not to use "heavy-calibre guns, combat aircraft or aerial weapons, which could cause civilian casualties", the statement said.
The Sri Lankan government had previously said that no heavy weapons were being used in populated areas and that the operation was merely a "rescue" exercise.
But the LTTE accused the government of carrying out two more air raids on a rebel target, even after the military announced it would end the use of heavy weaponry.
S Puleedevan, an LTTE spokesman, said the announcement was an attempt "to deceive the international community, including the people of Tamil Nadu [a Tamil-majority Indian province]", the pro-Tamil website TamilNet.com, reported.
The Sri Lankan military has, however, denied the LTTE claim.
Tamils in India have been pressuring the Indian government to intervene to bring about a ceasefire in Sri Lanka.
Meanwhile, Sri Lankan forces are continuing with "humanitarian operations aimed at rescuing" the remaining civilians trapped in the conflict zone in the island's northeast, where the LTTE is defending a narrow strip of jungle, the military said on Monday.
"We reduced the coastline they have to 6km from 8km last week," Brigadier Udaya Nanayakkara, a military spokesman, said.
"Our operations are continuing, and yesterday we managed to rescue another 3,200 civilians," he said.
Colombo's announcement to halt "heavy combat" came as John Holmes, the UN humanitarian chief, visited the island with a plea to both the administration and the Tamil Tigers to spare trapped civilians.
He met Rohitha Bogollagama, Sri Lanka's foreign minister, before visiting camps in northern Vavuniya where more than 113,000 civilians have sought refuge in camps that are overcrowded and still without enough supplies.
Holmes told Al Jazeera that the UN is trying to send a humanitarian team into the area, but needs the government to ensure his staff at least a minimal level of security.
Al Jazeera's David Chater, reporting from Sri Lanka, said the timing of Holmes' announcement is significant and has raised many questions.
|Holmes is visiting camps for the people displaced by the fighting [Reuters]
"The fact that John Holmes is touring the IDP (internally displaced peoples') camps up in the north and wants to get two of his security officials into the Tamil Tigers' stronghold to assess the humanitarian crisis means some form of pause has to be arranged so they can get across the front line safely."
About 110,000 civilians escaped from the LTTE-held territory last week after an ultimatum by the government for the Tamil Tigers to surrender.
The United Nations estimates that up to 50,000 non-combatants are still in the conflict zone, while the government maintains that the number is less than 20,000.
Sri Lanka's government has said it is on the verge of defeating the LTTE after 37 years of conflict, and has consistently brushed off international calls for a truce.
On Sunday, the government also rejected an LTTE call for a unilateral ceasefire.
Gotabhaya Rajapakse, Sri Lanka's defence secretary, dismissed the truce offer as "a joke".
"What is the need for a ceasefire when they are running away? They should first lay down arms, surrender and let the people go," he said.