Sri Lanka's military said Saturday it averted a major disaster in the capital Colombo by knocking out two Tamil Tiger light aircraft packed with explosives before they could hit their intended targets.

Colombo activated its air defence system as the planes approached late Friday, shooting down one near the city's main airport and apparently forcing the other off course and into the Inland Revenue building.

Air force spokesman Janaka Nanayakkara said each plane was packed with 215 kilos (473) pounds of C-4 type plastic explosives and the city's ground-based air defence units had averted a major disaster.

However, the pro-rebel Tamilnet.com said the attacks, in which two people died and another 58 were wounded, were "successful."

"This is a desperate attack," said defence spokesman Keheliya Rambukwella. "They may be trying to divert attention from their defeats in the north."

Tigers losing ground

The Tigers' territory in the northeast of the island has been rapidly shrinking in the past two years as government forces, backed by aircraft, tanks and heavy weapons, have carried out their biggest-ever onslaught.

"They are rapidly losing ground and they would have had to destroy the planes anyway before the army stormed in," said a military field commander, who declined to be named.

Rambukwella said security forces hoped to crush the Tigers "in a matter of days," adding, "very soon, this problem will be over."

Authorities said the wounded included tax department staff and bystanders hit by falling debris. The identity of the two dead has not been released, but one of them was believed to be a child.

A canteen worker, Ranjith Dissanayake, 45, said he saw the aircraft hit the tax office. "There was a huge explosion and I was thrown on the ground," he said.

Shortly after the attack, firemen and air force units recovered parts of the aircraft from the tax building.

A search of the wreckage of the downed plane found the pilot had no night vision equipment to fly in pitch darkness and used a pocket torch and a hand-held global positioning device.

The rebels said the targets were air force facilities in capital and that two men from their elite "Black Air Tiger" suicide squad piloted the two light aircraft in the attack. Both pilots died.

98pc of territory lost

In neighbouring India, air defence systems were on alert for possible intrusion by rebel aircraft. A narrow strip of water separates Sri Lanka from the southern Indian state of Tamil Nadu, home to the 62 million Indian Tamils as well as to thousands of Sri Lankan Tamil refugees.

The Tigers are believed to have had five Czech-built Zlin-143 aircraft smuggled into the island in pieces and re-assembled. It is not known how many they have left after the government launched its all-out offensive.

The guerrillas have now lost over 98 percent of the territory they once controlled and are confined to an area of less than 100 square kilometres (38 square miles) along a coastal jungle stretch in the island's northeast.

Fighting between the two sides has provoked international concern for the safety of tens of thousands of civilians trapped in the war zone.

Friday's air attack came as the UN's top envoy on humanitarian affairs, John Holmes, was visiting the island to assess the situation for non-combatants.

Tens of thousands of people have died since the Tigers launched a campaign in 1972 to carve out a homeland for minority Tamils in the majority Sinhalese island's north and east.