Sri Lankan government forces have launched fresh attacks on a reservoir, hours after Tamil Tiger rebels agreed to let it be reopened, reports say.
Rebels had warned fresh attacks would be seen as a declaration of war.
But a government spokesman said that utilities could not be used by rebels as bargaining tools.
Fighting between the two sides erupted after the Tigers cut the water supply to government-held villages in the north-east more than two weeks ago.
The Tamil Tigers had agreed to end the dispute by releasing water to about 15,000 farming families, following talks with Norwegian peace envoy Jon Hanssen Bauer.
But government spokesman Keheliya Rambukwella said the government had not been involved in the talks.
"We don't want terrorists to come and open the water way. They must simply allow irrigation engineers to do it, otherwise we will open it anyway," he told the AFP news agency.
Rebels said the Norwegian had promised that the grievances of Tamil people living in areas near the waterway would be considered by the authorities.
But Nordic truce monitors said the army continued to fire artillery at Tiger areas near the blocked Maavilaru sluice gate.
"It is quite obvious they are not interested in water. They are interested in something else," said Tommy Lekenmyr, chief of staff for the unarmed Sri Lanka Monitoring Mission, told Reuters news agency.
"We will blame this on the government." he added. "They said if you have any personnel in the area, make sure that they leave because we are starting an operation."
The Sri Lankan military said it was pushing ahead with an operation to secure the sluice area, and that any firing was in support of that effort.
Act of war
The military responded to the initial water blockade with air strikes and a ground assault, plunging the island into some of its fiercest fighting since the signing of a ceasefire agreement four years ago.
On Saturday, rebels pulled back from the north-east town of Muttur after more than a week of heavy fighting with government troops.
Ethirajan Anbarasan of the BBC's Tamil Service says the government seemed to have been surprised by the Tigers' swift military advance.
Rebels claim they overran many army camps as well as capturing Muttur.
But more than 20,000 people were believed to have left the mainly Muslim town on Friday seeking safety in neighbouring towns. The military accused the Tigers of killing 100 civilians during the exodus.
Militarily the rebels have made a point, but they appear to have lost out on the Muslim support in the region, our correspondent adds.