COLOMBO (AFP) -- Thousands of civilians were on the run Sunday in Sri Lanka's restive northeast after heavy artillery exchanges left over 85 people dead, according to the Tamil rebels and government forces.

The Defense Ministry said that 1,450 displaced by the fighting in the district of Trincomalee were found temporary accommodation in schools, temples and public building in the neighborhood.

The ministry said that 40 Tamil Tiger rebels were killed and another 40 were wounded when troops retaliated against Tiger artillery attacks on Saturday. It said government forces lost two soldiers and that another 37 were wounded.

However, the Liberation Tigers of Tamil Eelam (LTTE) said 45 people were killed, including at least 15 civilians in areas held by them following the army's shelling. "In the battle that lasted for several hours, 30 Sri Lanka army soldiers, including two senior officers, were killed. Five bodies of soldiers have been captured by the LTTE," the Tigers said in a statement. "Some weapons were also captured."

The Tigers placed their losses at seven cadres wounded.

Both sides blamed each other for the plight of civilians trapped in rebel-held areas as well as territory controlled by the military.

Hundreds of civilians were also unable to leave because of the sporadic artillery attacks on the main roads, a military official in the area said by telephone.

The two sides were exchanging long-range attacks along the district borders of Trincomalee and Batticaloa, local officials said adding that much of the fighting had died down on Sunday.

The renewed attacks came after peace broker Norway failed on Friday to secure an agreement to end a blockade on the Jaffna peninsula, where nearly half a million people are trapped by fighting.

The LTTE said they told Oslo's envoy, Jon Hanssen-Bauer, to persuade the government to provide access to the embattled north without conditions.

The government had asked Hanssen-Bauer to secure a deal with the Tigers to allow a convoy of some 400 trucks to travel through rebel-held territory, but the Tigers rejected a one-off convoy.

Instead, the LTTE political wing leader S.P. Thamilselvan told Hanssen-Bauer the government must open a disputed highway to Jaffna, as well as another highway to the island's east.

The Tamil Tigers have been campaigning for independence for the island's minority 2.5-million Tamil community in the majority Sinhalese nation of 19.5 million people.

More than 3,400 people have been killed in Sri Lanka in the past year in the bitter ethnic conflict that has claimed more than 60,000 lives since 1972.