"We could have held on to these defences, but it would have cost too many lives," said military spokesman Brigadier Sanath Karunaratne.
The army said a barrage of mortar and artillery fire from the Tigers had caused unacceptably high army casualties, forcing it to withdraw from territory that it had captured in an offensive launched on Wednesday.
"We could have held on to these defences, but it would have cost too many lives," said military spokesman Brigadier Sanath Karunaratne.
The fighting is the bloodiest seen in over a year, with the army saying that 157 soldiers had been killed and more than 800 wounded since Wednesday, and that 190 rebels had been killed.
Differing accounts
The Liberation Tigers of Tamil Eelam (LTTE) dispute these figures, putting military casualties at 300 dead and 1,200 wounded while claiming that they had lost only 48 fighters.
"The launching of this offensive still has strategic value to the security forces because it was a pre-emptive strike and caused heavy casualties to the enemy as well," said Brigadier Karunaratne, adding that the two sides were still exchanging artillery fire.
The loss of Elephant Pass last year was seen as the army's worst defeat in the 18-year conflict that has claimed an estimated 64,000 lives.
That important defeat proved to be a turning point in the conflict, as a Norwegian-brokered peace initiative began to gather momentum.
'Peace talks still possible'
The Tamil Tigers announced earlier this week that they would not extend a unilateral truce, but President Chandrika Kumaratunga said on Friday that peace talks with the rebels were still possible without a cease-fire in place.
"As far as we are concerned, having a cease-fire is irrelevant to the peace process," she said in a statement published on the government's official website.
Diplomats have echoed her sentiments, saying it was premature to declare the peace process dead.