The navy said at least 20 Tigers died during a clash with a rebel flotilla in the most recent deadly sea battle fought during an upsurge in violence that threatens peace talks planned for later this month.
The fighting erupted a day after the Liberation Tigers of Tamil Eelam (LTTE) told peace broker Norway that they would attend October 28-29 negotiations in Switzerland, but only because the international community wanted them to.
Diplomats involved in the peace process had not expected the LTTE to return to the negotiating table from a position of weakness after suffering territorial losses and serious casualties since April.
However, the Tigers have reversed the situation, first repulsing a major government offensive and killing at least 133 soldiers on October 11 on the northern Jaffna peninsula.
On Monday, the rebels killed 115 people, mostly sailors, in the island's north-east in their bloodiest suicide bombing, followed two days later by a suicide attack on Sri Lanka's southern naval base at the port of Galle.
Two were killed in the Galle bombings, while nine bodies thought to be those of rebel attackers have been recovered.
"It is fairly certain that the parties now want to go to Geneva for talks," a diplomat said. "No doubt the international pressure is pushing them."
Officials said an agenda had yet to be finalised for the talks.
The logistics of ferrying Tamil Tiger delegates from the rebel-held north to and through the island's only international airport could still pose serious challenges to the Norwegian peace brokers, as it has in the past, government officials said.
The LTTE delegation, which is yet to be named, "will be going (to Geneva) only on the guarantees given by the international community," the LTTE's political wing leader S. P. Thamilselvan said in a statement.
"We are going for talks in deference to the wishes of the international community."
Diplomats said the Colombo government was also keen to resume talks despite a tit-for-tat policy adopted by the authorities since a suicide assassination attempt against army chief Sarath Fonseka in April.
Before the military debacle last week, British High Commissioner (ambassador) Dominick Chilcott warned that military action was not the solution to Sri Lanka's long-drawn out conflict which has claimed more than 60,000 lives.
"Most outside observers, including the United Kingdom, continue to think that it would be a serious miscalculation to believe that ... Sri Lanka's national problem can be solved by military action," Chilcott said at a public meeting last month.
Sri Lanka's largest single foreign aid donor, Japan, stepped up diplomatic pressure on the government this week, officials said, as the United States too sent a special envoy to nudge the parties forward.
US Assistant Secretary of State Richard Boucher arrived on Thursday, the same day that Japan's envoy Yasushi Akashi left after the Tigers announced they would enter talks and Colombo said it would also take part.
Boucher said at the end of his visit on Friday that Washington was encouraging both the rebels and the government to "lower the temperature" and have a "new beginning" in their faltering peace process.
Both the Tigers and the Sri Lankan government had said they were keen to resume negotiations, which stalled after a meeting in Switzerland in February.
Military analysts have said talks could form part of the larger military strategy of both sides and they could be entering negotiations just to appease the international community.
The two sides have blamed each other for violence that has claimed the lives of more than 2,300 people since December, despite a cease-fire struck in
2002.

Copyright AFP (Agence France-Presse), 2006