The Tamil rebels said they are losing patience with the government and could be forced to resume their civil war if attacks on their members continue.
The statement followed the killing of two of senior rebel leaders and two civilians by unidentified assailants on Sunday in the northeastern town of Trincomalee.
The rebels say military intelligence officials are behind the attack. The army has denied it. Sunday's attack was the latest in a series of killings in the past year of rebels or members of Tamil political parties.
The violence escalated after a split in the rebel ranks last year. The Tigers accuse the government of supporting their rivals, and conducting a shadow war against them.
The government denies that, and in turn accuses the rebels of killing hundreds of rivals and intelligence operatives.
To protest the killings, offices and banks closed in Trincomalee and Tamil Tiger supporters burned tires.
Norwegian ceasefire monitors say the growing violence is "worrying." Jehan Perera, head of the National Peace Council in Colombo, echoed their concern. "The situation is not very good. This does not necessarily mean that there will be a breakdown of the ceasefire in the sense of a return to full scale fighting ... but there is an apprehension of localized fighting taking place on a significant level. Up to now what has been happening is targeted assassinations on either side," he said.
The Tamil rebels halted their two-decade long civil war for a separate Tamil homeland three-years ago under a Norwegian-monitored ceasefire. But the peace process has been deadlocked for more than two years.
Recently the government and the rebels signed an agreement to jointly handle billions of dollars of tsunami aid, raising hopes that the two sides could resume a dialogue.
But analysts say that is unlikely to happen soon, because a weak minority government is too preoccupied with its own survival to be able to breathe fresh life into the peace process.
The government's difficulties were apparent on Tuesday. Hundreds of thousands of protestors led by the main opposition party demonstrated in the capital Colombo to protest high prices, and the government's failure to end ethnic tensions with Tamil rebels.