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Soldiers were conducting "counter-terrorist operations" along the northern and northwestern defences of Kilinochchi, the political capital of the Liberation Tigers of Tamil Eelam (LTTE), the defence ministry said.
It said the military carried out at least 10 bombing sorties against Tamil Tiger positions on Wednesday as ground troops faced stiff rebel resistance.
The LTTE said it repelled the multi-pronged offensive by government forces, killing 170 soldiers and wounding 420 on Tuesday and Wednesday.
The military rejected rebel claims and said they lost only 25 soldiers.
President Mahinda Rajapaksa's government has been predicting the imminent fall of Kilinochchi for months, and the military recently said it was within "kissing distance" of the town.
But heavy rebel resistance and monsoon rains have slowed the army offensive.
In January the Sri