President Mahinda Rajapakse said he was keen that the current parliament serve its full six-year term. It was elected in April 2004, while the president came to power in November 2005.

"I am not interested in calling a snap election," the president told AFP late Saturday on the sidelines of his first public rally, in Nawalapitiya, central Sri Lanka, after troops captured the rebels' final bastion in the east.

"This is a very favourable time for our party, but I don't want to go for another general election and spend two billion rupees (18 million dollars) to conduct that election.

"I can build a few more roads with that money. We have a stable government and I want other parties too to unite and move forward."

Blue flags signifying his party and banners welcoming him as a hero were raised across Nawalapitiya.

"Welcome our hero," said one blue-and-white banner. "Mahinda to secure our tomorrow," said another.

Maithripala Sirisena, the secretary of Rajapakse's Sri Lanka Freedom Party (SLFP), said Saturday's public rally represented the first in a series due across the country.

"We want to use these engagements to respond to some of the key issues as well as respond to criticism by the opposition," Sirisena said.

Two SLFP dissidents last week formed an alliance with the main opposition in the first open bout of defiance since Rajapakse narrowly won the presidency.

Rajapakse's minority government secured a simple majority in the 225-member assembly in February after engineering the defection of 17 opposition legislators.

Local media reports have speculated that Rajapakse may opt for an early election to capitalise on the government's recent military victory.

Rajapakse told a large public gathering in Nawalapitiya, 150 kilometres (93 miles) east of Colombo, that he wanted unity among parties to end the tropical island's drawn out ethnic conflict.

Last week, Rajapakse said the Tamil Tigers must decide between war and peace, and that he was prepared for both.

Meanwhile, a powerful bomb was found at a market along a road leading to a conference venue where Sri Lankan President Mahinda Rajapakse addressed workers from his Freedom Party Sunday, police said.

The bomb weighing about eight kilograms (17.5 pounds) was hidden in a bag at the roadside market in the Colombo suburb of Delkanda, police said.

"The bomb was rigged up with a timing device," a police officer at the scene said. "But it was not primed to go off. We suspect that the attacker dumped it hastily because of tight security in the area."