A ministry official was reported as saying a further four soldiers were also missing.

Local officials said the small military base in the northeast of the county had been shelled to prevent government troops reinforcing their colleagues under attack.

This latest incident comes less than 36 hours after the Liberation Tigers of Tamil Eelam (LTTE) offered to resume political talks with the government of President Chandrika Kumaratunga and said they wanted third-party mediation.

Although the government has yet to make any formal reaction, the state-run Sunday Observer newspaper said the government was cautious towards the LTTE's call for talks and officials would not immediately take a "definite position" on the offer.

Urge for peace

However, moderate politicians are urging the government to use this latest offer by the Tamil Tigers to end the political and military stalemate in the long-running conflict, which has claimed over 55,000 lives since 1972.

"The government can make use of this and go for talks," Tamil legislator Dharmalingam Sidhathan said.

"It should not be like in the past where you go on talking and talking. You must agree to a specified time period," he added.

The government has been demanding that the Tigers declare their intention to surrender arms, agree to conclude political talks within a specified time and recognise the right of others to join a peace process.

Firm position

However, on Saturday, the LTTE leader, Velupillai Prabhakaran admitted for the first time that the Tamil Tigers had now acquired air power.

He also noted that they captured a key army base two months ago.

Tamil Tiger leader, Velupillai Prabhakaran, is prepared to talk

Mr Prabhakaran said: "We are not prepared to accept pre-conditions for political dialogue.

"They (Tamils) want the war to come to an end and the occupation army that torments them to withdraw and their urgent essential problems addressed immediately.

"We are prepared to engage in initial talks to discuss the removal of such pressures and to work out a basic framework for political negotiations," he said.

Last month the LTTE freed a group of Sri Lankan soldiers after holding them for nearly five years, heightening speculation the rebels might be seeking peace talks.