Sri Lankan troops have captured a strategically important town used by the Tamil Tigers as a key supply route to the island's north, the army says.
Correspondents say it is the first time in recent fighting that the army has captured parts of the A9 highway leading to the Jaffna peninsula.
Military spokesman Brigadier Udaya Nanayakkara said that the army took control of Mankulam town on Monday.
He said that in capturing the town the army had cut off rebel supply routes.
The town has been in rebel hands for since 1999 and lies near the A9.
The army says that the town was captured after several hours of heavy fighting and is important because it lies on a strategically important junction of the road, giving them control of the north, south and east.
The rebels are fighting a rearguard action in the north
The A9 is the main way of travelling overland from the centre of the island to the north.
But correspondents say that the rebels seldom used the route because they knew it would make their forces vulnerable to land and air attacks by the army.
"In addition to capturing Mankulam, we are holding Panichchankulam which is 10km (six miles) north," army commander Lieut Gen Sarath Fonseka said.
"Although the Sri Lankan army had control over this area 10 years ago we could not hold onto it. In capturing the area we have killed a large number of Tigers and chased many away."
The Tigers have not commented on the reported fall of the town, but the pro-rebel Tamilnet website reported that they beat back an offensive by government forces on Sunday in the Jaffna peninsular, killing 20 soldiers.
On Sunday the army said it had entered the Tamil Tiger stronghold of Pooneryn and now controls the entire western coast.
Sri Lanka's military is on a major offensive to try to crush the Tigers and end their fight for an independent state for the ethnic Tamil minority.
Most communications lines to the rebels have been cut and the government bars independent journalists from where the fighting is taking place.
The Tamil Tigers have been fighting in the north and east since 1983 and about 70,000 people have been killed in the violence.