Sri Lanka soldiers fought an intense battle with Tamil separatists in the war-torn northern region and later found seven rebel bodies, the military said Friday. The hours-long fighting erupted Thursday in the village of Panikkankulam as army troops pushed toward the main highway that cuts through rebel-held territory in the north, a military statement said. The statement said the clashes caused “heavy damage” to the guerrillas, leaving scores of rebel fighters dead. Troops found seven rebel bodies after the clashes, along with six assault rifles, it said. It was not possible to contact rebel officials for comment because most communication lines have been severed. Independent accounts are difficult to obtain from the battlefield because journalists are barred from the war zone. The new fighting came as soldiers closed in on the rebels' administrative capital of Kilinochchi in a campaign aimed at routing the guerrillas and ending a 25-year-old war that has killed more than 70,000 people. Officials have pledged to crush the guerrillas by the end of the year. In the past months, government troops have made dramatic progress on the northern fronts, seizing a series of rebel bases and chunks of land, but the rebels have offered stiff resistance to advancing troops. The Tamil Tigers have fought since 1983 to create an independent homeland for ethnic minority Tamils, who have suffered marginalization at the hands of successive governments controlled by ethnic Sinhalese. President Mahinda Rajapaksa on Thursday sought approval for Sri Lanka's largest-ever defense budget from Parliament, saying the operation to relieve the country from terrorism has reached its final phase. Rajapaksa, who also serves as defense minister, proposed to spend Rs177 billion ($1.6 billion) on defense for 2009, an increase of 6.4 per cent from Rs166.4 billion ($1.5 billion) allocated this year. Rajapakse, asked the Tigers on Thursday to lay down arms and surrender. “My earnest plea to the terrorists is to lay down arms and join the democratic process, even at this late stage,” the president said while unveiling a war budget in parliament. “If not, they would be militarily defeated. We have come to a stage in which we believe that we should and we can eradicate terrorism,” he said.