There are reports of ferocious close-quarter battles between the advancing soldiers and the rebels.
The defence ministry says that troops have now surrounded a group of Tamil Tigers in about a square kilometre of territory after capturing a key supply route of the rebels in the Puthukudiyiruppu area.
According to the defence ministry, heavy fighting is still continuing in the area and soldiers have recovered at least 21 bodies of rebels killed in the fighting on Wednesday.
The Tamil Tigers have not reacted to the military's version of events.
But pro-rebel websites said the guerrillas had been fiercely resisting the army's advance and that hundreds of soldiers had been killed in the fighting.
Independent journalists are not allowed to report from inside the conflict zone.
The human cost of Sri Lankan fighting
On Wednesday, the government once again firmly rejected calls for a ceasefire but said the military would suspend its attacks to ensure the safety of civilians fleeing the war zone.
The World Food Programme says its food consignment on a government chartered ship comes amid increasing concern for civilians.
"The government's timely provision of a large capacity vessel enabled WFP and other partners to ship this urgently needed assistance," said Adnan Khan, WFP country director for Sri Lanka.
It is estimated that between 40,000 and 150,000 civilians are trapped in the conflict zone in the north-east.
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