COLOMBO, April 10 (Reuters) - The nations leading Sri Lanka's peace process on Friday urged the Tamil Tigers to free 100,000 civilians they are holding and the military to stop shelling the no-fire zone where the separatists are making their last stand.
The statement from the United States, Britain, Japan and Norway came as Sri Lanka's military said it had begun what it called "the largest hostage rescue operation in the world" by identifying the best routes for people to get out.
The four-nation group, dubbed the Tokyo Co-Chairs, discussed on a conference call "how to best end the futile fighting without further bloodshed", a U.S. State Department statement said.
"They call on the Tamil Tigers to permit freedom of movement for the civilians in the area," it said. "They reaffirmed the need to stop shelling into the 'no fire zone' to prevent further civilian casualties."
Tens of thousands of civilians are trapped inside a 17 square km (7 sq mile) army-declared no-fire zone on the northeastern coast, held there by the Liberation Tigers of Tamil Eelam (LTTE) and being killed in shelling, the co-chairs' statement said.
It is on that piece of land where the final act of Sri Lanka's 25-year civil war is expected to play out, and diplomats have been working furiously to negotiate an exit for the people stuck there but have been repeatedly rebuffed by the LTTE.
The government has vowed no ceasefire but pledged to stop fighting briefly to let people out as it has done in the past. At least 64,000 people have fled since January.
President Mahinda Rajapaksa spoke with U.N. Secretary-General Ban Ki-moon late on Thursday, and assured him that "Sri Lanka was aware of and observes all international obligations to protect civilians", a statement from the president's office said.
The Defence Ministry said troops had begun "the world's biggest hostage rescue operation" and that the 58th Division, which has won several major recent victories, would spearhead it.
Military spokesman Brigadier Udaya Nanayakkara said troops were within a few hundred metres of the no-fire zone and broadcasting messages advising people the best routes of escape.
"No shelling is going on and up to now about 300 people have come today. There are people coming in now, but then the LTTE had come and assaulted some of them, we were able to see," he said.
Pro-rebel website www.TamilNet.com said this week hundreds have been killed by shelling in recent days, while Human Rights Watch in a statement on Friday reiterated its charge that the government was shelling the no-fire zone.
"Sri Lanka's so-called 'no-fire zone' is now one of the most dangerous places in the world," Brad Adams, Asia director at Human Rights Watch, said in a statement. Sri Lanka has repeatedly accused the group of inaccurate and biased reporting.
Diplomats say they fear thousands could die if the LTTE and government cannot cut a deal to free them, either getting killed in combat in the densely packed area or dying in a mass killing orchestrated by the Tigers to be blamed on the military.
The latter, diplomats say, would help the LTTE energise their diaspora while hurting the government by damaging ties with western governments who may be forced to cut off aid.
The LTTE has vowed economic sabotage against the state, which is seeking a $1.9 billion loan to help solve a balance of payments crisis while struggling with downward pressure on the rupee currency and shrinking export earnings. (Editing by Sugita Katyal)
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