Survivors of the attack who arrived at a military post told how Tiger fighters had fired on a group of 1,000 people trying to cross the frontlines to safety, he said.
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"The civilians came to an army position carrying the 17 dead and 69 others who had gunshot injuries," Nanayakkara said.
According to the government, increasing numbers of non-combatants are attempting to escape from the rebels, who face imminent defeat in their decades-long armed struggle for an independent Tamil homeland.
Among those wounded in the attack were 27 women and 11 children, the military spokesman said.
It came a day after a Tamil Tiger suicide bomber killed 30 people at a centre for fleeing civilians, in another apparent attempt to stop them from leaving.
But thousands of Tamils are crossing the frontlines in the north of the island each day, the government has said, as it pushes on with a massive offensive to crush the Tamil Tigers after 30 years of unrest.
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