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Soldiers backed by tanks and air cover fought on Tuesday to capture 30km of seafront, the only territory still controlled by retreating rebels, Brigadier Nandana Udawatte told reporters taken to the area.
As the government said its offensive to end the separatists' decades-long campaign was entering its final stages, UN Secretary General Ban Ki-moon expressed strong concern over the fate of civilians trapped in the war zone.
At least 178 have been killed and another 725 wounded in fighting in January as Sri Lankan forces made rapid progress
against the rebels, local health official T Satyamurthy said.
Lack of resources
"We don't have any staff or medicine. Security is a major problem, so we can't work properly," Satyamurthy said.
The International Committee of the Red Cross (ICRC), in a statement from its Geneva headquarters, said a major humanitarian crisis was unfolding in northern Sri Lanka where about 250,000 people were trapped.
Medical facilities there were overwhelmed by "hundreds of dead and scores of wounded," it said.
"It's high time to take decisive action and stop further bloodshed because time is running out," said Jacques de Maio, ICRC head of operations for South Asia. He said people were being caught in the crossfire.
Sri Lanka has dismissed charges of widespread civilian deaths, with military spokesman Brigadier Udaya Nanayakkara saying any such claims are part of a "cheap propaganda exercise" by the Tigers.
Civilians 'absolutely' protected
Sri Lanka's foreign minister Rohitha Bogollagama on Tuesday said Colombo was doing its utmost to spare civilians in the fight against Tamil Tigers.
Saying the government could "absolutely" guarantee civilian safety, Bogollagama said Tamil Tiger (LTTE) rebels operating in the north of the country were using civilians as human shields.
"They (Tigers) may want to target the military but they may not mind the civilian suffering because that prevents the civilians from moving beyond, fearing the artillery attacks on them," he told AFP in Brussels.
Bogollagama, who met EU and Belgian officials in Brussels, said the LTTE had even started targeting the army from no-fire zones set up to allow civilians to escape to safer areas.
The Sri Lankan foreign minister urged European leaders to prevent the Tamil Tigers' support network abroad from operating freely.
Tiger stronghold bombed
There were no civilians in the bombed-out town of Mullaittivu when journalists were given a tour on Tuesday, two days after troops captured the Tigers' military headquarters and drove the rebels deeper into the jungle.
"We are moving along the coast as well as to the northwest towards another pocket of Tiger resistance," said Udawatte, the commander of the operation to retake the town, which was the last rebel urban stronghold.
Udawatte said his troops had killed more than 2,000 Tamil rebels and wounded nearly 3,000 in the year-long battle for Mullaittivu.
Battlefield claims from either side cannot be verified as journalists are barred from travelling to the conflict zone on their own.
Sri Lanka's army chief Lieutenant General Sarath Fonseka has expressed hope of defeating the Tiger rebels completely by April.
Tigers vow to fight back
The whereabouts of rebel leader Velupillai Prabhakaran is not known, but a spokesman for the Liberation Tigers of Tamil Eelam (LTTE) was reported as saying that he was still in Mullaittivu district and had vowed to fight back.
Sri Lankan commanders had speculated that Prabhakaran had fled the island by sea.
"It is malicious propaganda, our leader is still with us. Our leader is giving leadership to our freedom struggle. He is with our people," the BBC quoted the Tiger political wing leader B Nadesan as saying.
The Tigers are widely expected to return to fighting a guerrilla war from hidden jungle bases.
Neighbouring India sent its foreign minister, Pranab Mukherjee, to discuss the issue, while the US ambassador Robert Blake urged both sides to "ensure civilians are not caught in crossfire".
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