COLOMBO (Reuters) -- Deadly artillery shelling of civilians by both Sri Lanka's military and the Tamil Tiger rebels is violating human rights, a deeply concerned United Nations said on Tuesday, appealing to both sides to stop.

More than 1,200 civilians have been killed so far this year in the crossfire of renewed civil war between the state and the Liberation Tigers of Tamil Eelam (LTTE), according to truce monitors, and thousands are fleeing fighting in the east.

The Tigers say dozens of civilians have been killed by army artillery fire in and around the rebel-held town of Vakarai in the eastern district of Batticaloa since Saturday, while the army accuses their foes of using them as human shields.

Around 30,000-35,000 displaced minority Tamils are living in camps in Vakarai, while more than 3,000 majority Sinhalese in government-held territory in neighboring Trincomalee district have fled rebel artillery fire.

"All fundamental rights are currently being breached in areas like Vakarai and villages in Trincomalee district," Amin Awad, Acting UN Resident Representative and Humanitarian Coordinator said in a statement.

"It is imperative that direct shelling where civilians reside stops and the civilian population must be granted full and unhindered freedom of movement, away from military operations," he added.

Thousands of civilians have sought refuge in Buddhist temples and schools in the government-held town Kantale in the far northeast, while tens of thousands more live in constant fear in the northern army-held Jaffna peninsula, which is cut off from the rest of the island by rebel lines.

The military said they had refrained on Tuesday from retaliating against rebel shells from Vakarai because they had been fired from civilian areas.

"Today we couldn't retaliate because we got it confirmed that they fired from near a hospital (in Vakarai)," said military spokesman Brigadier Prasad Samarasinghe.

He said civilians who had fled from rebel-held areas said they had been forcibly taken to areas where the Tiger artillery guns were positioned, something the rebels deny.

"They shift the guns and fire, and always use the civilians as human shields," Samarasinghe added.

More than 3,000 troops, civilians and rebel fighters have been killed so far this year amid a new chapter in a two-decade civil war that has killed more than 67,000 people since 1983.

The Tigers, who accuse successive Sinhalese-majority governments of discriminating against minority Tamils, have vowed to resume their fight for an independent state in the north and east of Sri Lanka after President Mahinda Rajapakse flatly rejected their demands.

Rajapakse last week introduced a raft of anti-terrorism laws aimed at cracking down on the Tigers and their supporters after a failed suicide attack on his brother, and analysts say any eventual peace agreement is likely years off.