The Sri Lankan Air Force says it has bombed Tamil Tiger positions in the northeast after the insurgents fired at troops advancing on a rebel-held irrigation canal.
The government says the soldiers came under mortar fire Sunday, adding that the troops' advance is also being slowed by land mines in the area.
The military accuses the Tamil Tigers of blocking a sluice gate in Trincomalee district to choke water supplies to thousands of Sinhalese farmers on government land.
The Tamil rebels have threatened the army with severe consequences if it enters territory they control.
Government air strikes have killed at least 15 rebels since Thursday. Escalating violence between the two sides is threatening to throw the country back into civil war.
The rebels have been fighting for a separate homeland since 1983. The violence has killed about 65,000 people. The two sides reached a ceasefire in 2002 but there have been increasing violations in recent months.
Some information for this report was provided by AFP, AP and Reuters.