Security forces took the town of Maniyakkulam, 25 kilometres (15 miles) south-west of the military's primary target of Kilinochchi, the political capital of the Tamil Tiger rebels, the ministry said.
It did not say how many Liberation Tigers of Tamil Eelam (LTTE) guerrillas were killed in Thursday's fighting.
The violence forced the return of a food convoy that the United Nations was trying to escort into the rebel-held Wanni region, the organisation said.
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The UN office said it would immediately seek "renewed security assurances from the two sides" before attempting to resend the 50-truck convoy with 750 tonnes of aid.
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Earlier Thursday, the rebels accused the military of bombing bridges in rebel-held areas in a bid to block food reaching civilians.
The military said the guerrillas fired at the convoy.
Most international aid agencies have quit the t