COLOMBO (AFP) -- Government soldiers shot dead seven civilians in Sri Lanka's northern Jaffna peninsula after a grenade attack wounded three soldiers in the same area, a pro-rebel website reported Friday.

The victims were on their way to attend a birthday party Thursday when troops opened fire with automatic rifles and rocket-propelled grenades, the Tamilnet website said.

"They were attacked by the Sri Lanka army men in retaliation to a grenade attack that took place behind their intelligence camp where three personnel, including an officer, were wounded," the Tamilnet said.

The Defense Ministry said troops fired at two three-wheel taxis transporting the men when they tried to attack an army sentry point.

"A huge explosion inside the second three-wheeler caused death to passengers," the ministry said, suggesting they were carrying explosives.

However military sources said the soldiers fired an RPG into the taxis.

The dead were suspected members of the rebel Liberation Tigers of Tamil Eelam (LTTE), the ministry said.

Two policemen also died Thursday in a grenade attack in the northern Vavuniya district, police officials said.

The latest violence came after gunmen stormed the offices of the pro-LTTE Uthayan newspaper in Jaffna late Tuesday, killing a manager and another employee.

Last week a suicide bombing in Colombo critically wounded army chief Sarath Fonseka and killed 11 others including the bomber.

The government, saying it was acting in self-defense against an LTTE attack, retaliated with air strikes against suspected positions of the Tigers, who are fighting for a separate state for minority Tamils.

More than 60,000 people have been killed in the island's separatist conflict in the past three decades.