Heavy fighting that broke out between the advancing Sri Lankan troops and the Tamil Tiger rebels at Muhamalai in the northern Jaffna peninsula has left at least 80 combatants dead and several more wounded, according to latest claims by both parties.

The defence ministry said the troops manning the Forward Defences at Muhamalai ''advanced to neutralise LTTE attacks on the Security Forces defence line'' on Wednesday morning, inflicting heavy damages to the LTTE.

''The number of LTTE cadres killed in the Muhamalai attack has risen to 60 according to latest LTTE communication,'' the Defence Ministry report claimed this morning, adding that 11 soldiers have also been killed in the attack.

''11 soldiers laid down their lives in countering the terrorist threat on the Muhamalai Security Forces forward defence line.

Another 41 who sustained injuries in the advance were rushed to hospital for urgent medical treatment,'' the defence ministry report said.

However, pro-rebel websites quoting LTTE sources reported that the rebels have 'repulsed' a major military ''ground operation towards the Northern Forward Defence Line positions between Kilali and Muhamalai in the early hours of Wednesday.''

Placing the troops killed in action as 20, the rebel sources have claimed that at least 100 soldiers have been wounded in the clash with one of their Main Battle Tanks being badly damaged.

The fierce clashes got under way at a time when President Mahinda Rajapaksa unveiled the budget proposals for 2008 in Parliament and vowed to wipe out terrorism completely in the island nation.

''It is essential to completely wipe out terrorism before finding any political solution to the ethnic conflict,'' President Rajapaksa, who is the commander-in-chief of the armed forces, said while highlighting his government's effort to defeat the LTTE militarily so far.

The Rajapaksa government has increased the estimated defence expenditure nearly by 20 per cent for the financial year 2008.

The Appropriation bill presented in Parliament early October this year showed that the proposed defence spending in 2008 would be 166.44 billion rupees up from an estimated 139.4 billion rupees in 2007.

22 Tamil parliamentarians of the LTTE-proxy Tamil National Alliance boycotted the parliament sittings yesterday in protest of what they called a ''defence budget''.