Thousands of people have been fleeing heavy fighting in the north-eastern town of Muttur in Sri Lanka.
Fighting between the army and Tamil Tiger rebels that began in a dispute over water has been spreading.
Both sides claim to be in control of Muttur, a mainly Muslim town in Trincomalee district.
Muttur has been cut off for several days. The Red Cross said it had been unable to reach the civilians after failing to obtain security guarantees.
Meanwhile a Norwegian envoy, Jon Hanssen-Bauer, has arrived in Sri Lanka and is expected to meet government officials and rebel leaders.
Casualties are hard to verify but the army says at least 23 soldiers have been killed since the military launched its latest offensive and the Tigers say they lost 25 fighters up until Wednesday.
Seventeen civilians who had taken shelter in a school died on Thursday after it was hit by shells. The army and the Tigers have blamed each other for the incident.
The Red Cross said 22,000 people had been displaced by the fighting in Muttur. Most of the town's inhabitants are Muslims caught in the crossfire.
The Red Cross's head in Trincomalee, Yvonne Dunton, said around 7,000 families were believed to be on the move.
She told the Associated Press: "We know that they have left their homes and are trying to come out."
Muttur has been cut off from humanitarian assistance for several days and thousands of people are trying to walk to safety in the nearby town of Kantale.
The BBC's Dumeetha Luthra, who is in Kantale, said civilians were walking through the jungle as far as Palathoppur, where they were being picked up by lorries and ferried away from the fighting.
She said: "The scene at Palathoppur was absolutely chaotic - women and children packing into the backs of tractor trailers, their plastic bags and battered suitcases clutched closely to them. They all looked tired, desperate and uncertain.
"As we stood there talking to them, suddenly the shelling got progressively closer. It was still some distance away, but it made the ground shake and the dull thud turned the chaos into panic."
Our correspondent said the dispute began when the Tigers closed the Maavilaru sluice gate to highlight Tamil grievances.
The government said it launched the offensive to save thousands of farmers who relied on the Maavilaru canal for vital water supplies.
Mr Hanssen-Bauer, Norway's special envoy to Sri Lanka, is thought to be planning to meet government and rebels leaders over the weekend in a bid to narrow the differences between the two sides.
Thousands of people are trying to escape the fighting
UN Secretary General Kofi Annan has expressed concern about the escalating violence.
The army says Tamil Tiger rebels attacked their camps and fired mortars at army positions on Friday.
"They are attacking our camps in the east. There is artillery and mortar fire. There are some civilians being injured," military spokesman Major Upali Rajapakse told Reuters news agency.
Despite the upsurge in fighting both sides still say they are acting defensively and therefore within the conditions of a 2002 ceasefire.
The government has offered to hold talks with the rebels over the water dispute, but say they will only stop fighting if the canal is reopened. So far the Tigers have not responded to the proposal.