The Sri Lankan government offered talks with Tamil Tigers on Thursday, to end the week-long fight over a disputed irrigation canal in the island's northeast as fresh artillery attacks in the troubled region claimed 21 lives, raising the death toll to at least 156.

In the Muslim-majority northeastern town of Muttur, local residents had moved to public buildings, including schools, for their safety, but a shell hit a school building, killing 10 people and wounding at least 50, the Defence Ministry said in a statement.

It said the rebel Liberation Tigers of Tamil Eelam had fired the shell, a charge denied by the guerrillas who in turn accused the military of carrying out the attack.

Another five civilians were killed and 10 wounded when the Tigers hit the Al Noori college at Thoppur, near Muttur where they also attacked a school -- Al Hameema, killing two civilians, the military said.

They said that the Tigers were trying to bring down artillery on military camps within Muttur, but were missing by large margins and hitting civilian targets.

Two constables and two para-military men attached to the local Muttur police were also killed in Thursday's clashes, officials said.

The latest deaths raised to at least 156 the number of people killed since the military launched an offensive eight days ago to lift a water blockade imposed by the Tigers depriving water to some 15,000 families.

The fighting has threatened to spiral into a full-scale war. In Colombo, the government said it was ready to talk to the rebels to resolve the water dispute. "The window is open," government spokesman Rambukwella told reporters.

"If the Tigers are ready, we are ready too to start talks immediately. It is our duty and responsibility to ensure that the people get water," he said.

The fighting erupted last Wednesday when the Sri Lankan military launched air strikes as part of an offensive to take control of the Maavilaru irrigation canal in Muttur town of Trincomalee after the rebels shut the sluice gates, depriving thousands of farmers of irrigation water.

Rambukwella said the army was ready to withdraw immediately from the site if the Tigers agreed to reopen the sluice gates.

Troops who had gone close to the sluices were unable to open them because the area is heavily mined and rebels have been firing mortar bombs.

The government insisted that the Tigers were behind the water blockade and after six days of talks through truce monitors failed, it was forced to send in aircraft to bomb Tiger positions and order troops to forcibly open the sluices.

"We never started a military offensive, all we did was disaster management. We want to ensure that people got water," Rambukwella said. "It is a humanitarian move."

He said peace broker Norway too had supported the government's stance by asking the Tigers to lift the water blockade - "If that happens, we will move out."

Norway is sending special envoy Jon Hanssen-Bauer to Colombo tomorrow to meet both sides and see if the truce can be salvaged.