By Amal Jayasinghe in Colombo

Government forces in Sri Lanka have marked the new millennium with a massive land, sea and air offensive against separatist Tamil Tiger rebels.

Fighting has been raging near a key army garrison since Christmas Day, but defence authorities say an upsurge in fighting on New Year's Eve saw at least 28 people killed on both sides.

Troops staged the offensive as Tamil Tiger rebels made a fresh bid to overrun a key army garrison near the Jaffna peninsular in the north of the country.

The Elephant Pass army complex, located at the entrance to the Jaffna peninsular, has been under intense artillery fire for nearly a week.

Defence authorities say the guerrillas made two attempts to breach defence lines of the military complex on New Year's Eve.

Security forces retaliated with what they called a limited offensive to push back the rebels.

Russian-built helicopter gunships attacked a flotilla of rebel boats in the Jaffna lagoon, while infantry troops and the navy too were deployed to attack rebel positions.

The Sri Lankan Defence Ministry said it had successfully repulsed the latest rebel offensive, but admitted suffering a large number of casualties.

Meanwhile the Tiger rebels say they have returned the bodies of 16 government soldiers killed by them in the same area earlier in the week.

The guerrillas, who made spectacular gains by overrunning 10 military bases in just five days fighting in November, have set their sights on retaking the Jaffna peninsular.

The rebels ran a de facto separate state in Jaffna before they were driven out by the army in December 1995.

Thousands of soldiers who retreated in the face of the rebel onslaught in November have been deployed to defend Jaffna.

Any rebel push to retake lost territory could lead to more bloodshed in the New Year.