The renegade regional commander of the Liberation Tigers of Tamil Eelam (LTTE) discarded the offer as "ridiculous," ending a bid by a Catholic bishop to help resolve the unprecedented split among the rebels.

Breakaway leader V. Muralitharan, better known as Karuna, said through an aide that he wanted to avoid bloodshed but repeated his charge that the LTTE's northern-based leadership had ignored Tamils in eastern Sri Lanka.

Diplomats here said the failure to peacefully resolve the standoff could seriously undermine Norwegian-led diplomacy to broker peace.

Norwegian special envoy Erik Solheim arrived here late Monday on a scheduled visit to review the Oslo-brokered truce between troops and the Tigers, but would now have to focus on the new developments as well, diplomats said.

It was not immediately clear if Solheim would meet with Karuna, a move that would amount to recognition of his faction, but the renegade leader said he was prepared to hold talks on a fresh peace accord.

The truce has been in place since February 2002, halting the Tigers' insurgency for a separate Tamil homeland that has claimed more than 60,000 lives since 1972.

Military officials in the east said that Karuna made it clear that he would hold his fire, but was not willing to recognise the ceasefire agreement between the government and his former boss, LTTE supremo Velupillai Prabhakaran.

Speaking through his aide known only as Varadan, Karuna said he was commanding fighters in two eastern districts and would not step down despite the amnesty offer made through the Bishop of Batticaloa Kingsley Swamipillai.

"It is ridiculous," Varadan told AFP by telephone. "It is they who should think of being forgiven by our people (in the east) for the sacrifices made to protect the land and the people of Wanni (in the north)."

Karuna, who is an ethnic Tamil from the east of the island, broke away last week after accusing the LTTE's northern-based leadership of hogging key positions despite the bulk of the Tiger fighting force coming from the east.

Varadan said it was the east that had sent thousands of fighters to protect the lands of the northern Tamils, known as Jaffna Tamils, while the easterners better known as Batticaloa Tamils were used as cannon fodder.

LTTE political wing leader S. P. Thamilselvan said in remarks published on the rebels' website Tuesday that Karuna was acting alone and did not have support among the rank and file.

However, the eastern district of Batticaloa where Karuna holds sway was paralysed by a one-day strike called Monday to express support for him.

Residents said schools were open Tuesday, but most parents kept back their children fearing an eruption of violence. Most shops remained closed although there was no formal strike called for Tuesday.

Bishop Swamipillai led a delegation of prominent citizens of Batticaloa to hold talks with Thamilselvan, who had originally offered the amnesty to Karuna on Saturday when he announced his dismissal from the LTTE.

"They (the Tiger leadership) assured that their actions to restore normalcy will not in any way affect the people or the LTTE cadres in the Batticaloa-Ampara Districts," the main Tiger group said in a statement.

Both sides have said they were keen to avoid a factional war, although Karuna's faction said it reserved the right to self-defence.

The crisis within the Tamil Tigers come just ahead of Sri Lankan elections on April 2, in which rebel proxies could play a decisive role.