The rebel Liberation Tigers of Tamil Eelam used a force of 400 to 500 fighters to attack the de facto front line in the Jaffna peninsula and a nearby islet, according to military spokesman Athula Jayawardena.
"We estimate at least 100 to 150 Tigers were killed and 200 to 250 were wounded," Jayawardena said.
"We had our share of casualties too with three officers and 22 other rankers and two sailors killed. Eight officers and 72 other rankers were wounded."
He said the Tigers fired 130mm artillery towards the main airbase at Palaly and damaged a Bell 212 helicopter and some other equipment near the control tower, but the airport was operational.
The army deployed special forces commandos to carry out mopping out operations after nearly 10 hours of fierce artillery exchanges, he said.
The Tigers had also sent a flotilla of boats to capture the islet of Kayts near Jaffna, but the Navy repulsed that attack, the military spokesman said.
Simultaneously, the Tigers also fired at the Trincomalee Navy and Air Force bases in the northeast of the island for about 45 minutes, he said.
He said the military retaliated and neutralised the Tiger fire from three 122 mm artillery guns near Trincomalee.
The Sri Lankan Air Force this evening destroyed an artillery gun position of the Tigers at Pooneryn, just south of the Jaffna peninsula.
It was the bloodiest fighting since the two sides entered into a truce in February 2002.
"The LTTE has intensified its terrorist activities to such an extent that it appears that they want to have a full-scale confrontation," government defence spokesman Keheliya Rambukwella told reporters.