Postal Services Minister Mahinda Wijesekara was battling for his life and was being airlifted to capital Colombo for emergency treatment. Among other prominent leaders injured included former southern province Chief Minister H G Sirisena.

"Around 10-15 people were killed as the suicide bomber struck the celebrations outside the mosque at Matara. A lot of people were blown to pieces which is making death count difficult," Matara police spokesman Ranjit Gunasekara said.

The bomber appeared to have targeted six ministers and local politicians as they walked in a procession towards a mosque in Akuressa area in Matara to mark Milad-ud-Nabi, the birth anniversary of Prophet Mohammad.

The attack came at a time when the Sri Lankan forces are on the verge of rooting out the LTTE from their last territory in Wanni region after 25 years of ethnic conflict.

The audacious strike showed that the Tigers still retained some capability to launch attacks far from their traditional strongholds in the north and east.

Military spokesman Brig Udaya Nanayakkara said the blast was a suicide bomb attack and carried out by the LTTE. The Tamil Tigers have repeatedly targeted senior government ministers and officials for assassinations and have been blamed for more than 100 suicide attacks.

The latest suicide bombing came as more than 250 LTTE rebels were killed in intense battles raging over the past few days near Pudukudiyyiruppu coastal region in Mullaitivu district.

The pro-LTTE website TamilNet.com said at least 100 government troops had been killed in the battle. It said 74 civilians have been killed and hundreds others injured on Monday and Tuesday in Sri Lankan shelling of Tamil-controlled areas.

Lanka condemns suspected LTTE suicide bomb attack

Condemning the suspected LTTE suicide bomb attack near a mosque in the southern Sri Lankan city of Matara in which at least 15 people were killed, the government asked the citizens to remain calm and unprovoked.

"The government condemns in the strongest possible terms the LTTE suicide bomb attack on the Milad-un-Nabi Muslim Festival to mark the birthday of Holy Prophet Mohammed at Godapitiya, Akuressa, Matara this morning around 10 a m," an official release said in Colombo.

At least 15 people were killed and more than 20 others, including a government minister, injured in the incident at Matara, about 160km from Colombo.

"The government urges all citizens to remain calm and unprovoked and support the security forces and police by exercising utmost vigilance as the LTTE, facing imminent annihilation, could very well resort to other similar acts of desperation," the release said.

"The government notes with utmost contempt this wanton act of terrorism and observes that the attack bears the unmistakable signature of the LTTE," it said.