The statement came as UN officials in New York said Vijay Nambiar, the chief of staff of the secretary-general, would arrive in Sri Lanka on Saturday "to help resolve the humanitarian situation".
Prior peace missions by senior diplomats have ended in failure, and on Thursday the Sri Lanka government vowed it would not cave in to pressure to halt the war.
Palitha Kohona, Sri Lanka foreign affairs secretary, told Al Jazeera that the Tamil Tigers were "sandwiched between two forces", with the miltary pushing from the north and the south.
"The fighting is mostly on the sea coast. That is not the area where the refugees are. They are concentrated in the centre of this piece of land."
Kohona said the Tamil Tigers were using civilians to fight the army, a claim the group has previously denied.
"The military knows there are quite a number of LTTE [Liberation Tigers of Tamil Eelam] combatants left. They are also throwing young people, children, armed with Kalashnikovs, against the military advance."
The developments came as the International Committee of the Red Cross (ICRC), which is the only aid organisation allowed to work in the conflict zone, said a boat attempting to evacuate wounded and carrying food aid had been unable to reach the area because of fierce fighting.
"Our staff are witnessing an unimaginable humanitarian catastrophe," Pierre Krahenbuhl, the ICRC's director of operations, said.
"No humanitarian organisation can help them in the current circumstances. People are left to their own devices."
James Elder, a spokesman for the UN children's agency, told Al Jazeera that conditions inside the conflict zone were dire.
"There has been fierce, unabated fighting since Saturday and the latest fighting is a catastrophe for children, which shows complete disregard for the most vulnerable of civilians," he said.
"At this moment it is hard to think of a worse place for a child to be on the entire planet because they're caught in indiscriminate fire and their living conditions are so abysmal.
"We are talking still of tens of thousands of people who are living in unimaginable hell and we cannot forget how important it is for them to get out of here. These people are suffering from a desperate lack of food, water and medicine."
An army spokesman said on Friday that 4,000 civilians fled the conflict zone overnight.
The government says people have been fleeing under fire from the Tamil Tigers, wading across a lagoon into government-controlled territory.
It is impossible to independently confirm claims from the government and the LTTE because journalists are banned from the conflict area and access for aid organisations is strictly limited.
The government says civilians are being used as human shields by the LTTE and need to be rescued, while the group says the army has been shelling the area, causing civilian casualties.
Navi Pillay, the UN's human rights chief, has said both sides may be guilty of war crimes.