Sri Lankan President Chandrika Kumaratunga has denied the government authorised military help for breakaway Tamil Tiger rebel Colonel Karuna.
The peace process appears stalled over Colonel Karuna
Last week a government minister admitted that members of the army had given assistance to Colonel Karuna.
The Tigers say the military backed Colonel Karuna in a campaign of killing and abductions of their supporters.
They say this went on while the government talked about peace and have accused the government of duplicity.
Stalled peace talks
"The president rejected the publicly aired allegations by the [Tamil Tigers] that the government had authorised the Sri Lankan military activities in the Eastern Province in support of the Karuna faction," the statement issued on behalf of Mrs Kumaratunga said.
"She reiterated the government's commitment to achieving a lasting peace and maintaining the ceasefire agreement."
This is the first time that the president has rejected the allegations by the Tigers of duplicity in her dealings with them.
The Tamil Tigers say the army is still sheltering Colonel Karuna and are refusing to attend talks with the military until the situation changes.
President Kumaratunga says the peace process should be more inclusive
The BBC correspondent in Colombo says that now the peace process seems to be stalled over the issue of Colonel Karuna.
The pro-rebel Tamil Guardian newspaper said in an editorial that the objective of the government is to build a new counter-insurgency structure around Colonel Karuna.
"Trust between President Kumaratunga's government and the [Tigers] has evaporated," the editorial said.
Meanwhile, Sri Lanka's new army commander has denied any knowledge of Colonel Karuna's whereabouts.
Lieutenant General Shantha Kottegoda said that the Tamil Tigers' belief that the army was aiding the faction would hamper efforts to restart peace negotiations.
"If they think the army is involved in such activities then the confidence-building measures we have been carrying out all this time will be disrupted," he said, referring to peace efforts since a truce was signed in February 2002.
Colonel Karuna broke from the mainstream Tamil Tigers four months ago to set up a separate regime in the east but after a brief spell of internecine fighting he vanished.
The Tigers have been fighting for two decades for a separate homeland in the east and west.