Dharmalingam Sithadthan, MP and leader of the People's Liberation Organisation of Tamil Eelam (PLOTE), said the killings followed an altercation and exchange of fire between members of his group and a group of soldiers.

He said two soldiers were injured in the shootout near the PLOTE office at Chavakacheri in the peninsula. Earlier reports had said one soldier was killed in the exchange of fire.

The soldiers later returned in a larger number and attacked the PLOTE office, he said. A military spokesman here confirmed the incident, but said details were awaited.

Sithadthan said the troops hacked to death two civilians, including a member of another Tamil group, who had come to the spot following the shootout. The PLOTE office was damaged, he added.

Sithadthan said the PLOTE members, who were in the office had fled, but a leader, Ponnuruthi Anton, who was the chairman of the Chavakacehri Pradeshiya Sabha was missing.

He said one of the dead was a member of the Eelam People's Democratic Party (EPDP), who was also a member of the nearby Pachchiali Pradeshiya Sabha.

Sources in Jaffna said that the EPDP had announced that it would boycott all the local government bodies in the peninsula unless the government instituted an impartial judicial inquiry into the incident.

The PLOTE and EPDP support the government in its war against the Liberation Tigers of Tamil Eelam (LTTE), but there have often been clashes between them and the troops in the past.