Airforce Mi-24 helicopters flew support as soldiers moved on Alankulam, in Mannar district, killing 15 rebels and injuring 20, a ministry statement said.
The military said three soldiers died and five were wounded in the pre-dawn attack.
However, the Liberation Tigers of Tamil Eelam (LTTE) reported repelling the attack killing 30 government soldiers and injuring five.
The separatist LTTE did not give their own casualty figures.
Elsewhere, two soldiers died as government troops on Friday took control of Adampan town, also in Mannar, killing 15 more Tamil rebels, the ministry said.
Friday's fighting raised the number of rebels killed by government troops since January to 3,503, according to the ministry, which lists 266 soldiers as dead over the same period.
The ministry casualty tolls cannot be independently verified since Colombo prevents media and rights groups from visiting the embattled areas.
Fighting has worsened since January, when Colombo pulled out of a six-ye