May 13 (Bloomberg) -- Sri Lanka said the international community is being duped by false reports of civilian deaths from the Liberation Tigers of Tamil Eelam as the group faces defeat in its 26-year battle for a separate Tamil homeland.

The “biased reporting is to draw the attention of the international community and to effect an intervention by the United Nations, which is the only way out for the LTTE terrorists,” the Defense Ministry said on its Web site.

The government denied that army shelling killed more than 1,000 people at the weekend, saying the reports are “disseminating falsehoods.” Tamils in the north say civilians are coming under repeated artillery and aerial attack. An aid worker died in the conflict zone today and the government said it destroyed three rebel boats. 38 people were killed when a makeshift hospital was hit in the zone, Agence France-Presse reported, citing a doctor at the scene.

Sri Lanka’s government says it is continuing its military offensive against the last LTTE fighters holding out in the northeast so that the army can free as many as 20,000 civilians held by the rebels. The U.S. and U.K. yesterday called on both sides to immediately end the fighting and let aid teams into the north where the United Nations says 250,000 people need food and medicines.

The Tamil Tigers are holding out with about 300 fighters in a strip of land declared a security zone by the military near the northeastern port of Mullaitivu, the army says.

Civilians Shelled

TamilNet, a Web site that gives reports from the Tamil perspective, said the army shelled civilians sheltering in the zone. An artillery shell struck another hospital in the war zone, killing 49 people, Thurairaja Varatharajah, the director of health services in Mullaitivu, said by telephone yesterday.

The report of the hospital shelling is “another fabrication,” the government said.

Accounts from the conflict zone are difficult to verify because outside observers are barred from the area.

“Defense sources and political analysts see a definite manipulative act by international channels acting in concert with pro-LTTE pressure groups to present this false news to the world at a time when it would suit the needs of the LTTE most,” the government said in a statement on its Web site.

Aid Worker Dies

A Sri Lankan employee of the International Committee of the Red Cross died today after being hit by a shell inside the war zone, Sarasi Wijeratne, spokeswoman for the agency, said in a phone interview from the capital, Colombo. “We don’t know who fired the shell. His mother also died. Our first employee died on April 8 and the second on March 4,” inside the conflict zones, she said.

Heavy fighting has made it “impossible” for the Red Cross to evacuate wounded and sick people from the combat zone and to deliver aid to trapped civilians, according to an e-mailed statement from the Colombo office of the agency.

The conduct of UN officials releasing unverified information to the media “has led to much concern,” it added.

Satellite images and witness accounts contradict the Sri Lankan government’s claims that its armed forces are no longer using heavy weapons in the “densely populated” conflict zone, Human Rights Watch said in a statement yesterday.

“Neither the Sri Lankan army nor the Tamil Tigers appear to have any reluctance in using civilians as cannon fodder,” Brad Adams, Asia director of the U.S.-based body said, according to the statement. The American Association for the Advancement of Science issued a preliminary analysis of the satellite images that showed craters from the use of heavy weapons between May 6 and May 10, according to the statement.

Conflict A ‘Bloodbath’

The UN said May 11 the conflict has become a “bloodbath” as hundreds of civilians were killed in the government-declared security zone. The UN estimates as many as 50,000 civilians are in the area.

“The latest surge in fighting is a catastrophe for children and shows a complete disregard for these most vulnerable of civilians,” Daniel Toole, the regional director for South Asia with the UN Children’s Fund, said yesterday, according to the UN.

The Tamil Tigers must lay down their arms and let civilians leave and the Sri Lankan government must abide by its April 27 commitment to end major combat operations and the use of heavy weapons, U.S. Secretary of State Hillary Clinton and U.K. Foreign Secretary David Miliband said in a statement after they met in Washington yesterday.

Political Solution Demanded

The UN should be allowed to organize the evacuation of civilians from the conflict zone, they said.

Clinton and Miliband called for a political solution “that reconciles all Sri Lankans and establishes a meaningful role for Tamil and other minorities in national political life,” according to the statement issued by the State Department.

Soldiers advanced a further 300 meters (980 feet) into the security zone, the Defense Ministry said. The capture of the Wadduvakal causeway yesterday will open another escape route for civilians, it said.

Naval soldiers destroyed three boats of the Tamil Tigers while they attempted to attack and a second attempt by a flotilla of rebel boats was also thwarted, the government said in a statement.

Troops have rescued more than 116,000 people from the zone since April 20, the government says.

To contact the reporters on this story: Paul Tighe in Sydney at ptighe@bloomberg.net; Jay Shankar in Bangalore at jshankar1@bloomberg.net.

Last Updated: May 13, 2009 06:46 EDT