The Sri Lankan military say they have taken what they are calling the last Tamil Tiger rebel stronghold in the east of the country.
The army has recently stepped up its operations in the east
A spokesman said troops had re-taken the rugged area of Thoppigala in the district of Batticaloa, which has been in rebel hands for years.
The Tamil Tigers still control large swathes of the island's north.
Speaking to the BBC in their stronghold at Killinochchi, the rebels admitted the army was now dominant in the east.
In other fighting, two civilians were killed and nine others wounded when air force jets bombed a village on the north-east coast near Mullaittivu, the pro-rebel TamilNet website said.
'Terrorist nerve centre'
Correspondents say that the fall of Thoppigala gives the government control over the entire eastern province for the first time in nearly 14 years, if troops can hold on to the base.
The Tigers still control large parts of northern Sri Lanka, where they run a de facto state.
But the government says that its troops have taken a lot of territory in the east in recent months, and have killed hundreds of rebels since February. The rebels dispute the casualty figures.
"Commandos and soldiers... reached Thoppigala a few hours ago," a military statement said on Wednesday.
"With this victory, the troops have captured the nerve centre of the terrorists in their last stronghold in the eastern province," the statement said.
"The victorious soldiers are presently clearing enemy pockets scattered in the dense jungle and are pursuing the rebel cadres who are on the run."
The Tigers' military spokesman, Rasiah Ilanthirayan, told the BBC their forces who remain in the east had gone into "guerrilla" mode and he said winning the war was not about taking control of real estate.
He told the Associated Press news agency: "We have changed our tactics and it is not surprising if they have entered the region. But whether they will be able to stay there peacefully is another question."
A ceasefire signed between the two sides in 2002 is still in place on paper in Sri Lanka, although it has broken down on the ground.
Much of the fighting up until now has taken place in the east.
The rebels say if government forces try to advance on their areas in the north, they will resist, using every means at their disposal.
More than 60,000 people have died since the rebels began fighting for an independent homeland in the north and east in the 1970s.
The Tigers say minority Tamils are discriminated against by the majority Sinhalese population.