"The window is open," said government spokesman Keheliya Rambukwella. "If the Tigers are ready, we are ready too to start talks immediately. All we wanted to do was to ensure that the people get water. We do not want to go back to war."

The conciliatory move came as peace broker Norway tried to salvage what was left of a 2002 truce made virtually irrelevant by air, ground and sea battles that have marked the bloodiest eight days since the ceasefire.

Rambukwella said fighting raged Thursday in the Muslim-majority town of Muttur in northeastern Trincomalee district as Tigers who infiltrated the area during shelling on Wednesday continued to offer resistance.

"There are a few pockets of resistance but we are in total control over Muttur," Rambukwella said. He added that residents in the area had been asked to move to public buildings to allow troops to search for Tigers.

Seventeen civilians and four police were killed in artillery attacks in Sri Lanka's northeastern Muslim town of Muttur on Thursday, military officials said.

The civilians were killed when shells hit three schools where they were sheltering after security forces asked them to move to public buildings while troops mopped up Tamil Tiger rebel resistance, officials said.

Military spokesman Upali Rajapakse said the bloodiest attack was against Arabic College in Muttur where 10 people were killed and at least 50 were wounded.

He said two other Muslim schools at Thoppur, a suburb of Muttur, were also hit by shells leaving five dead and 10 wounded at Al Noori College and two killed at Al Hameema College.

"The Tigers are trying to bring down artillery on our positions and when they miss, this is what happens," Rajapakse said.

Two constables and two paramilitary troopers attached to the local police were also killed in the clashes in Muttur, officials said.

The defence ministry said the shell that killed the 10 civilians came from the Tigers while the pro-rebel Tamilnet.com website said the attack had been initiated by the military.

The Tamilnet did not report the other two attacks.

The latest deaths raised to at least 156 the number of people killed since the military launched an offensive eight days ago to lift a canal blockade imposed by the Tigers, depriving some 15,000 families of water.

Rambukwella said he had no information about the shelling.

The fighting began when the military sent warplanes to bomb the Tigers on Wednesday last week. It escalated on Monday when the army launched a massive ground operation to try to take control of the Maavilaru reservoir and reopen sluice gates shut by the rebels.

The government described its military action as a "humanitarian gesture" to restore water to some 15,000 families in the Trincomalee district.

Diplomats close to the peace process said Norway had already offered a face-saving exit to both parties by asking them to return to the positions they held at the ceasefire and negotiate a settlement.

Norwegian embassy spokesman Tom Knappskog said Oslo's special peace envoy Jon Hanssen-Bauer was due in Colombo Friday to hold talks with both sides.

Rambukwella said Norway had supported the government's stance by asking the Tigers to lift the water blockade. "If that happens, we will move out," he said.

The Tigers Thursday morning however opened another front against the security forces, firing mortar bombs at military camps in the Mannar district 150km from Trincomalee.

"Mortars are being directed at Mannar but security forces have retaliated to neutralise these attacks," a military official said. "We believe these are diversionary tactics."

The fighting has killed at least 156 people, 139 of them since Monday, according to an official count.

Norway's top peace broker Erik Solheim in a statement said the escalation of the conflict coincided with the worsening of the situation of the Nordic Sri Lanka Monitoring Mission (SLMM).

The LTTE has refused to cooperate with Danish, Finish and Swedish monitors since the European Union included the LTTE on its list of terror groups in May, Solheim said.

The three Nordic nations, which are also EU members, have said they would withdraw their monitors by the September 1 deadline set by the Tigers but Colombo opposes the pullout.

The International Committee of the Red Cross appealed to both sides to spare civilians while the EU asked for restraint and an end to the bloodshed.

The Tigers argued Wednesday that their action was to stop military attacks against civilians under the pretext of securing water.

Local officials said troops had not managed to reopen the sluice gates as the area is heavily mined.