Truce monitors have travelled to Trincomalee in north-east Sri Lanka to try to ease tension after two days of government air strikes on Tamil rebels.
There have been no fresh government attacks in Trincomalee
The strikes were called after a suicide bombing on army headquarters in Colombo on Tuesday left at least eight dead and the army chief seriously wounded.
The Tamil Tiger rebels called the air strikes "genocidal" and said tens of thousands had fled their homes.
The violence has cast serious doubts on the future of the 2002 ceasefire.
On Thursday, the government said it was banning all public rallies and demonstrations within Colombo with immediate effect.
There have been no new government attacks since the air strikes on Tuesday and Wednesday.
However, both sides have threatened to retaliate further if they are attacked.
On Thursday, a mine blast in the Kayts islet in the north's Jaffna peninsula killed two navy sailors but a government military spokesman said this would not spark new air strikes.
The head of the international truce monitoring team, Ulf Henricsson, is in Trincomalee and is planning to visit the area where the air strikes took place.
The BBC's Dumeetha Luthra in Colombo says the monitors believe the break in violence offers a glimmer of hope.
The government has reopened crossing points into the Tamil Tiger-held areas that were sealed off after the bombing on Tuesday.
BBC correspondent Soutik Biswas has now reached Trincomalee after a 270km (170 mile) journey from Colombo on a road with little traffic but a heavy military presence.
The leading peace mediator, Norway's International Development Minister Erik Solheim, said from Oslo he did not believe the violence signalled an end to the February 2002 ceasefire.
"We are working with the parties on an hour-to-hour basis to do whatever possible to bring them back to the negotiating table," he said.
The Tamil Tigers say more than 40,000 people were displaced as refugees after the latest air strikes.
Lyndon Jeffels, spokesman for the UN refugee agency, could not confirm that figure, but said: "Certainly it seems that there is a very significant displacement."
Humanitarian workers were confined to their homes, he said.
On Thursday President Mahinda Rajapakse announced the government was setting aside $1m to bring "essential supplies" to those displaced by violence in the region.
Ambassadors from the nation's main donors have met Mr Rajapakse in the wake of the violence and called for restraint.
The ban on rallies in Colombo was imposed to ensure the safety of the general public, the government said.
The Tigers say more than 12 civilians were killed in the air strikes - the first official military action since the 2002 truce - but the government denies civilians were targeted.
The Tigers expressed "distress and dissatisfaction" at the international community's "absence of concern" over the attacks.
At least eight people were killed in the attack on army headquarters
The suicide attack in Colombo was apparently carried out by a woman who made herself appear heavily pregnant to conceal explosives.
In addition to the dead, army chief Lt Gen Sarath Fonseka was seriously wounded.
The rebels have denied being behind recent bomb attacks, although experts believe the Colombo bombing bears all the hallmarks of the Tigers.
The Tigers began their armed campaign for a separate homeland for the island's Tamil minority in the north and east in the 1970s.
More than 64,000 people have died in the conflict.
The rebels last week pulled out of peace negotiations in Geneva, accusing the government of attacks on ethnic Tamil civilians.