"After bitter clashes... troops captured a LTTE (Liberation Tigers of Tamil Eelam) administration base inflicting heavy damages on the terrorists," the ministry said in a statement.
Casualty details on both sides were not known, but the ministry said troops recovered three rebel bodies after the confrontation.
Military claims cannot be verified as the independent media are barred from travelling to the frontlines.
The LTTE did not comment on Monday's fighting, but the rebels have admitted loosing ground in recent weeks -- including the northern town of Kilinochchi which they used as their political base for nearly a decade.
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Sri Lanka has poured in a record 1.7 billion dollars into this year's war effort as troops push to eject the Tigers from their last stronghold in the jungle and lagoon