At least 45 civilians have been killed in eastern Sri Lanka after army shells hit a camp for people displaced by the fighting, Tamil Tiger rebels say.
A wounded child being treated at hospital
Independent monitors who visited the scene confirm that many people were killed or injured. They say the attack seems to have come from army areas.
Another 125 were wounded in the shelling in the Vakarai region, rebel spokesman S Puleedevan told the BBC.
The army accused rebels of using civilians as human shields in the area.
Ceasefire monitors from the Sri Lanka Monitoring Mission (SLMM) say they have counted 23 bodies, and there could be many more.
"It seems a school where some internally-displaced people were residing has been hit in the attack," an SLMM spokesperson said.
"We can confirm lots of people are dead," the spokesperson said. "The numbers are unclear, but initial reports show 50 to 60 people have been killed. The injured could number several hundred."
Tamil Tiger rebels say the number of deaths could be as high as 100.
Military spokesman Brig Samarasinghe said there had been "heavy artillery" exchanges in the Batticaloa area.
The government agent for Batticaloa, S Puniyamoorthy, said more than 1,000 refugees were living in the camp - a school building in the town of Kathiraveli near Vakarai.
The injured have been taken to a hospital in Vakarai
According to reports, bombs fell in the area for about an hour around midday.
A doctor at a local hospital, Muthulingam Atchuthan, said he had been told about a "massive incident" and that he had dispatched 10 ambulances and a bus to recover casualties.
The Red Cross said their aid workers have seen 18 corpses, Reuters news agency reports. They said 50 wounded had been taken to a hospital in Vakarai.
Brig Samarasinghe said the two sides had been exchanging artillery fire in the area for the past few days.
"This morning, the rebels intensified their attack. Five of our soldiers were wounded. We also retaliated," he said.
Sri Lanka's defence ministry later suggested that there may have been civilian casualties when troops retaliated after rebel shelling.
"The Tigers had been planning this situation since the beginning of this month by detaining the innocent civilians in those areas by force to be used as a human shield when the time arises," a statement said.
The government and the SLMM, a group of European observers overseeing a 2002 ceasefire which now exists only in name, say more than 3,000 civilians have been killed in violence since the beginning of this year.
The Tigers and the Sri Lankan military have clashed several times in the recent days since peace talks collapsed in Geneva in late October.
The Sri Lankan air force has repeatedly shelled Tiger areas since the failure of the talks.