More than 30 people have died in fresh clashes between Sri Lankan government forces and Tamil Tiger rebels.
A mass funeral for the bus victims was held on Friday
The Sri Lankan navy said six sailors were killed in a Tiger attack near Mannar. Eight rebel boats were destroyed, and about 25 rebels killed.
The Tamil Tigers dispute this and say they killed 12 navy personnel - two rebels were injured, no-one killed.
The government has been targeting the rebels since a mine attack on a bus on Thursday which left 64 people dead.
The rebels have denied responsibility for the claymore mine attack.
Friday saw other violence in the region:
- An attack on a Mannar church left one person dead and many injured, a bishop told the BBC
- Three Tamil Tiger divers were reportedly captured after coming ashore, two of them after unsuccessfully trying to commit suicide
In the latest clashes, the military said navy and police came under attack from a Sea Tiger unit near Mannar and responded with air and artillery strikes.
"We destroyed eight of the 11 boats that came for the attack," navy spokesman DLP Dassanayake is quoted as saying by the Associated Press news agency.
The Tamil Tigers say four Sri Lankan Navy (SLN) boats intercepted and attacked the Sea Tiger unit, which retaliated and sunk three of the SLN vessels while damaging the fourth one.
"Twelve SLN personnel were killed and many more were injured. Two of our Sea Tigers sustained minor injuries," a Tamil Tiger statement said.
Thursday's bus attack in Anuradhapura - an area with an ethnic Sinhalese majority near rebel territory - was the worst involving civilians since the truce was signed.
A mass funeral took place on Friday for victims.
Grieving relatives and villagers all gathered to mourn the dead. The coffins of 11 children were laid out in a row.
"Peace talks are rubbish," farmer Prasanna Sandaruwan, 18, told Reuters news agency.
"During the ceasefire the [Tigers] kill our people. We have not been given peace. Better war for us. We must defeat the [Tigers]."
The killings brought a tide of international condemnation.
The Tigers denied involvement, saying the bombing might have been the work of a paramilitary group linked to the government.
On Thursday, government spokesman Keheliya Rambukwella said the administration would have to "seriously consider" the ceasefire agreement signed in 2002.
But President Mahinda Rajapakse visited victims of the bus attack and said he remained committed to peace.
Suspected attacks by Tamil Tigers on security forces and killings of Tamils blamed on the army and others have soared in recent months.
Earlier this month the rebels refused to meet the Sri Lankan government in talks in Oslo, mediated by Norway.
The Tamil Tigers want a separate homeland for minority Tamils in the north and east of Sri Lanka. More than 60,000 people have died in two decades of conflict.