The military say seven soldiers have been killed and eight injured. It says it's killed more than thirty-five Tamil Tigers. The rebels dismissed this saying only three fighters have died in the clashes.

The figures are impossible to verify. The dispute is over access to water affecting thousands of farmers.

The government security spokesman Minister Keheliya Rambukwella say the military had advanced five hundred metres from the position they were in Sunday.

Livelihood of thousands

Air strikes, mortars and artillery are all being used as Sri Lankan ground forces try to inch towards the disputed waterway. It's been closed, allegedly by Tamil Tiger rebels, jeopardising the livelihoods of thousands of villages in the area.

The Tigers say the military has launched a three-pronged attack which they have repelled. They've called the incursion an act of war and have promised to retaliate.

Sri Lankan security forces have launched a major ground offensive in the eastern Trincomalee district. Air force jets and artillery units have also been shelling Tamil Tiger rebel positions inside the rebel held area.

Senior LTTE leader in the district Mr Ezhilan said their cadres are offering fierce resistance and have beaten back the army offensive. But, he said, the army has launched another offensive this afternoon and that heavy fighting is still going on.

Bloodiest ground battle since ceasefire

He said that two LTTE cadres have been killed in the fighting today and the military has suffered heavy casualties.

The government has defended it as a humanitarian intervention to open the sluice gates and says it is a limited operation.

The offensive the bloodiest ground battle since a ceasefire was signed in 2002. Diplomats and analysts say this could push the Tigers into a response which would escalate into a wider conflict.

Meanwhile the Sri Lanka Monitoring Mission spokesman Thorfinnur Omarsson said "there is no ceasefire but the ceasefire agreement is still valid "at least on paper". He blamed both sides for fighting.