Dozens of Sri Lankan soldiers and Tamil Tiger rebels have been killed or wounded in fierce fighting in the north of the island, the two sides say.
Clashes are worsening between the two sides
The clashes occurred near the front lines at Muhamalai in Jaffna peninsula.
There were wildly conflicting accounts of the death tolls, which could not be independently confirmed.
Observers say the two sides are gearing up for major confrontation in the north. The government has unveiled plans for record defence spending.
Fighting between troops and the rebels, who want autonomy in the north and east, has worsened in recent months.
The battle at Muhamalai broke out on Wednesday morning, the army said.
A statement said troops had "smashed over 20 rebel bunkers".
"Latest reports emanated from the LTTE [Tamil Tigers] confirmed 52 Tiger terrorists were killed," the army said.
It said 11 soldiers had died in the fighting, while 41 soldiers had been wounded and taken to hospital.
Reports suggest the number of army wounded could be much higher.
The rebels had a very different account. They said they had lost just one fighter in the clash, and that 20 soldiers had been killed.
"The clash lasted about two hours, and they fell back to their original positions with heavy casualties," Reuters news agency quoted rebel spokesman Rasiah Ilanthiraiyan as saying.
He said the army attack on rebel bunkers had been successfully repulsed.
Each side frequently inflates losses sustained by the other side while downplaying its own, correspondents say.
On Wednesday President Mahinda Rajapaksa asked parliament to back record levels of defence spending in the budget for the coming year.
The funeral for top rebel SP Thamilselvan, killed last week
Mr Rajapaksa, who is also defence and finance minister, outlined plans to spend $1.5bn on the military, a 20% increase.
"We have no alternative but to completely eradicate terrorism," he told parliament in a long speech broadcast on national television.
Despite losing territory in the east earlier this year, the rebels still control a vast swathe of land in the north.
They suffered a further setback last Friday when their political leader, SP Thamilselvan, was killed in an air force bombing raid.
He was the most senior rebel to be killed for years.
The rebels are fighting for autonomy for minority Tamils in the north and east, claiming discrimination by the majority Sinhalese population.
About 70,000 people have died in more than 20 years of war.