The military strenuously denies shelling civilians
The United Nations has described the situation in northern Sri Lanka as a "bloodbath" after reports of heavy civilian casualties at the weekend.
UN spokesman in Colombo Gordon Weiss said more than 100 children died during the "large-scale killing of civilians".
The Sri Lankan government objected to the remarks and said it would formally complain, AFP news agency said.
A doctor working in the war zone said more than 430 people had been killed after two days of bombardment.
Meanwhile, the military spokesman for the Tamil Tiger rebels, Ilanthirayan, has been seriously wounded in fighting.
Mr Ilanthirayan sustained heavy injuries in an attack by the Sri Lankan army on Sunday, the pro-rebel website TamilNet said.
The Sri Lankan defence ministry said a senior officer of the rebels' sea wing also died in fighting last week.
The UN had consistently warned of an impending bloodbath in the area, Mr Weiss said.
It estimates that about 50,000 civilians are trapped by the conflict in a three-km-sq strip of land.
"The large-scale killing of civilians, including the death of over 100 children, over the weekend shows that the bloodbath scenario has become a reality," he added.
The Sri Lankan Foreign Secretary, Palitha Kohona, said the government took "serious offence" at the remarks by Mr Weiss, AFP reported.
A formal protest would be made to UN representative Amin Awad, who had been summoned by the government.
"It is not the role of the UN office to say anything in public to embarrass the host government," Mr Kohona said.
A doctor working in the war zone said on Monday that more than 430 deaths had been confirmed after two days of artillery and mortar bombardments.
He added that the final death toll could be much higher as many bodies could be seen lying around. He said that the hospital was struggling to treat about 1,300 others who had been injured.
The doctor said that heavy arms appeared to have been fired from government-run territory into a mainly civilian area under rebel control.
The army denied shelling the designated "safe zone" for civilians.
The government said the Tigers had done the firing.
The claims are impossible to verify as reporters are banned from the war zone.
The BBC's Charles Haviland in Colombo says the issue of civilian casualties is highly sensitive here and the state-owned Daily News on Monday makes no mention of the incident at all.
Meanwhile, the pro-rebel TamilNet website said a key Tamil rebel figure has been seriously wounded.
"Liberation Tigers of Tamil Eelam (LTTE) military spokesman Irasiah Punitharooban - alias Ilanthirayan (Marshall) - sustained heavy injuries in the latest artillery barrage by the Sri Lanka army in the early hours of Sunday," TamilNet reported, quoting sources close to the rebels in the Vanni region.
According to Sri Lanka's defence ministry, Ilanthirayan was a senior cadre of the rebel group from Batticaloa.
The defence ministry said the second-in-command of the Tigers' sea wing, identified as Cheliyan, was killed in a fighting last week.
The rebels have not commented on the death so far.
The British Foreign Secretary David Miliband is to co-sponsor informal discussions in New York on the island's humanitarian situation.
The Sri Lankan government is dismissive of calls from him and other diplomats for a ceasefire in the north: it says it is about to defeat the rebels permanently and that a ceasefire would not help civilians.
In response to claims of civilian deaths, military spokesman Brigadier Udaya Nanayakkara said the Tamil Tigers had used artillery and mortar fire on two occasions on Saturday morning, directed against civilians within their zone.
Sri Lankan defence spokesman Keheliya Rambukwella also told the BBC that reports of government shelling were "propaganda" of the Tigers.
He said the guerrillas were "holding people to ransom" in their area, and accused them of killing nine civilians who were trying to escape their zone on Saturday.
The Tamil Tigers have fought for an independent homeland for Sri Lanka's Tamil minority since 1983.
More than 70,000 people have been killed in the war.
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