Sri Lanka's government is set to open two days of talks with the Liberation Tigers of Tamil Eelam (LTTE) in Oslo, the capital of peace broker Norway, after their main foreign financial backers warned them to scale down violence.

Norway called the meet to discuss the safety of Scandinavians monitoring a troubled truce, but it also signals that the peace process is not "completely dead", government spokesman Keheliya Rambukwella said.

"It may be a second or third-level meeting, but the important signal is that the peace process is not completely dead," Rambukwella said. "There is hope, the doors are not shut and the parties are talking to each other."

The two sides are to focus Thursday on the safety of the 60-member Sri Lanka Monitoring Mission consisting of personnel from five Nordic nations. They have sought security guarantees after several close calls.

Sri Lanka's key foreign financial backers last week warned both the Tigers and the Colombo government to curb the violence which has claimed over 650 lives since December or risk international isolation.

In a carrot-and-stick approach, the European Union slapped a ban on the Tamil Tigers and offered them recognition if they gave up the use of violence and entered the democratic mainstream.

The EU also noted that the Tigers were not the only ones to blame and asked Sri Lanka's government to make good on promises to ensure that there were no killings in areas under its control.

President Mahinda Rajapakse responded by firmly ruling out a military option in Sri Lanka and offered a new political deal with the Tamil Tiger guerrillas.

The president sought support from the main opposition to draft a power-sharing deal with the rebels in exchange for ethnic peace in the island, and said the EU ban on the Tigers should encourage them to enter talks.

"This (EU ban on the Tigers) is a window of opportunity made available to Sri Lanka to seek a solution to the ethnic conflict and achieve a lasting peace," Rajapakse told opposition politicians meting here on Friday.

Government sources close to the peace process said Rajapakse's hard-line allies who had helped him win the November presidential election appeared to be mellowing and were more amenable to a deal with the Tigers.

"Political parties supporting the government now feel that it is not their individual party line that matters, but the national interest," constitutional affairs minister D. E. W. Gunasekara said.

"We are not expecting a quick solution, but we have made a start and for the first time we will be working on a final solution to the problem," Gunasekara said.