The elusive Tamil Tiger supremo Velupillai Prabhakaran is still in Sri Lanka [Images] and leading his fighters on the battlefront in Mullaittivu, a top rebel leader has said.

Describing as 'malicious propaganda' reports that Prabhkaran has fled the island, B Nadesan, the political head of the Liberation Tigers of Tamil Eelam, said, "Prabhakaran is with our people. He is still leading the freedom struggle".

Nadesan's comments to BBC over satellite telephone came amidst reports about heavy fighting between Sri Lankan forces and Tigers, who were trying to avoid total defeat.

Sri Lankan military commanders including Army Chief Lieutenant General Sarath Fonseka have said they were unaware of Prabhakaran's whereabouts. Reports claim that Prabhakaran could have already fled the island nation by sea with the help of his arms-running network in South-East Asia.

Lankan soldiers, backed by tanks and fighters, are involved in a decisive battle to squeeze out the Tigers from the last 30-kms of forested sea-front, where they have been pushed to.

The government has said that the operation had entered its last stages, as United Nations Secretary General Ban-Ki-Moon has expressed concern over the fate of an estimated 150,000-400,000 civilians trapped in the war zone.

Nadesan accused the army of 'shelling and targeting' civilian safety zones and claimed there had been large number of casualties. He ruled out the possibility of LTTE [Images] cadres laying down arms and entering negotiations with the government.

"We took up arms to safeguard our people. We need a guarantee of living with freedom, dignity and sovereignty...until that we will continue fighting," the LTTE leader said in an interview, which was the first comment from the Tigers after there disastrous retreat.

Talking about the reverses suffered by the rebels, the political chief of the LTTE said, "In a liberation war, it is normal for a force to lose territory and regain the same."

He said that in the past, the LTTE had withdrawn many times and bounced back to achieve big victories.

But, even as Nadesan was making claims that the LTTE had not lost the war, Sri Lankan navy has stepped up patrols along the coast to prevent any attempt by LTTE's top leadership to escape.

A number of South-East Asian countries including Malaysia have sounded an alert for the LTTE chief.