COLOMBO: Sri Lankan helicopters fired rockets at Tamil Tiger rebels constructing a trench during three days of clashes that killed at least 85 people, the military said on Monday.

Soldiers are 2 km from Kilinochchi, capital of the Liberation Tigers of Tamil Eelam’s (LTTE) quasi-government, after an advance that since July has intensified into the bloodiest period of the war since a ceasefire ended in January.

The latest fighting along a frontline of heavily mined jungle thick with concrete bunkers and trenches, killed 76 rebels and wounded 92, the military said. Nine soldiers were killed and 52 were wounded, it said.

Mi-24 attack helicopters rocketed rebels using heavy equipment to build a trench line near Akkarayankulam reservoir on Saturday, just southwest of Kilinochchi, the air force said.

The LTTE says it is fighting to create a separate homeland for Sri Lanka’s minority Tamils, who have complained of marginalisation by successive governments led by the Sinhalese majority since independence from Britain in 1948.

The rebels were not immediately available for comment. The death tolls are nearly impossible to verify, with both sides engaging in regular distortions for propaganda reasons and the war zone being closed to most journalists.

“Sri Lanka’s war on separatist rebels will not be slowed by international financial turmoil placing pressure on the government’s military budget,” Foreign Minister Rohitha Bogollagama said on Monday.

Bogollagama, speaking in Australia where he was urged to seek a political end to the 25-year conflict, said Sri Lanka’s military would continue to press its latest bloody offensive against the Liberation Tigers of Tamil Eelam, or LTTE.

“We are coming to the final stages of taking on the LTTE. We are quite confident our financial resources can sustain the current engagement,” Bogollagama told journalists.

Sri Lanka’s army last week pushed to within 2 kilometres of outer Kilinochchi, the strategic headquarters town of the Tigers, located 330 kilometres north of the capital Colombo.

As the offensive intensified, the government proposed a 2009 budget in which total local and international borrowings were projected to rise by 20 percent, in part to fund a 6.4 percent lift in the projected cost of the war, despite the current freeze in global credit markets.

Bogollagama said President Mahinda Rajapaksa had no option but to continue an offensive that gathered pace earlier this year when the government formally annulled a 2002 ceasefire, accusing the rebels of using it to re-arm.

“As far as the LTTE is concerned, we need them to lay down arms and start talking, and it’s time the LTTE does that,” he said.

Australia’s foreign minister, Stephen Smith, said Canberra had “long-standing concerns” about the intensifying conflict and accusations of human rights violations on both sides.

“There was a very clear understanding that no long-term enduring solution can be found simply through the use of military force,” Smith said, adding more talks were needed on ideas for a semi-autonomous region in LTTE-controlled northern areas.

At least 40 people were reported killed for a second straight day on Friday as airstrikes continued on Kilinochchi, although casualty figures are impossible to verify as foreign observers are barred from the conflict zone.

Both sides regularly distort gains for propaganda purposes. Bogollagama is in Australia to talk about “post-conflict” Sri Lanka amid expectations the military could capture Kilinochchi, although conflict analysts also fear a wave of reprisal bombings by the LTTE.