The ministry said rebel Liberation Tigers of Tamil Eelam (LTTE) blocked civilians, mainly Muslims, fleeing the town of Muttur and killed at least 100 of them Friday night.
There was no immediate reaction from the Tigers to the ministry claim which came as Muslim legislators accused the guerrillas of holding over 100 Muslim civilians who tried to escape the fighting in Muttur in the island's northeast.
However, the official count of the fatalities has now risen to 426 with the 100 civilian victims.
At least 20,000 civilians fled Muttur and sought shelter in the nearby Kantalai town.
The International Committee of the Red Cross (ICRC) said they had no access to the area and could not verify the report of the massacre and other civilian casualties.
"We still have no access to the area and therefore we can't say anything about these reports," ICRC spokesman Sukumar Rockwood told AFP.
However, he said the ICRC sent six trucks to a point south of Muttur Saturday to evacuate about 600 civ