Troops captured the village of Sinna Paranthan, northwest of Kilinochchi, from the Liberation Tigers of Tamil Eelam (LTTE), the ministry said.
"Over 20 LTTE terrorists were killed and many injured during the confrontations," it said in a statement.
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"Troops have recovered five LTTE bodies."
The ministry said troops were consolidating their defences in the newly captured area, but did not say if there were casualties among government forces in Tuesday's fighting.
The Tigers on Monday claimed that they killed more than 100 soldiers and had re-taken territory lost to advancing government forces.
Both sides are known to make exaggerated claims about casualties they have inflicted on each other, and independent verification is virtually impossible as journalists and aid workers are barred from the conflict area.
In January the Sri Lankan government pulled out of a 2002 Norwegian-brokered truce with the rebels, who have been fighting since 1972 for a state for ethnic minority Tamil