Sri Lanka on Monday gave the Tamil Tigers 24 hours to surrender or die after troops breached a huge earthen defence and unleashed an exodus of tens of thousands of civilians held there by the rebels, the military said.

Sri Lanka's quarter-century separatist war has come down to a tiny strip of coastline, where the Liberation Tigers of Tamil Eelam (LTTE) are making a last stand while urging a ceasefire to protect civilians they have refused to free.

With so many civilians now outside the 17 square km (6.5 sq mile) no-fire zone that is the only battlefield left, Sri Lanka warned LTTE founder Vellupillai Prabhakaran to surrender or face a final military showdown.

"We have given a final warning to Prabhakaran and his terrorist group to surrender to the government forces within 24 hours from 12 noon," defence spokesman Keheliya Rambukwella told reporters at the Air Force battle management centre in Colombo.

"Thereafter will be a military course of action. That is the best option," Rambukwella said.

The LTTE could not be reached for comment. Prabhkaran, 54, and his fighters wear cyanide vials around their necks to be taken in case of capture. For decades, he has vowed no surrender in his fight for a separate state for Sri Lanka's Tamils.

With Asia's longest-running civil war now nearing its end, Sri Lanka will face the twin challenges of healing the divide between the Tamil minority and Sinhalese majority, and reviving an $40 billion economy that is suffering on multiple fronts.

The island nation is seeking a $1.9 billion International Monetary Fund loan to shore up a balance of payments crisis and boost flagging foreign exchange reserves, half of which were spent defending the rupee in the last four months of 2008.

Between 25,000 and 35,000 people fled on Monday but counts were not finalised, said Lakshman Hulugalle, director of the military's Media Centre for National Security.

The largest single-day exodus so far, which should put the number of those fleeing LTTE areas this year at near 100,000, started after soldiers fought past an earthen dam blocking the biggest land route in and out of the no-fire zone.

Live video from an unmanned aerial vehicle and beamed into the operations centre showed thousands of people thronging around temporary reception centres set up by the army less than a kilometre outside the no-fire zone.

"All of these small dots you see are human beings waiting to be checked," air force operations director, Vice Air Marshal Kolitha Gunatilleke, told reporters while displaying the footage.

That process is designed to weed out suspected LTTE suicide bombers. Nonetheless, three exploded themselves and killed at least 17 people and wounded 200 on Monday, the military said.

Other video footage saw groups of hundreds of people sheltering on the beach, the surf washing up. The military had no details on how many civilians remain inside the no-fire zone.

Several thousand of those people later tried to flee out of the north of the no-fire zone but were being stopped by the LTTE, air force spokesman Wing Commander Janaka Nanayakkara later said.

Enormous international pressure has been brought to bear against the government and the LTTE to hold fire long enough to let the trapped civilians come out. Estimates of their number range from around 60,000 to around 100,000.

The United Nations has accused the LTTE of forcibly recruiting people to fight and of shooting those trying to flee, and the government of shelling civilian areas.

Both have denied the accusations. So far only the government has offered breaks in the fighting to let civilians come out, the latest of which was a 48-hour break during the Tamil and Sinhala new year period last week that the Tigers rejected as too short. - Reuters