"Our intelligence sources believe that (Prabhakaran) was seriously injured or killed" in a Nov. 26 air raid, Rajapaksa told the state-run Sunday Observer. He cautioned, however, there was "no 100 percent confirmation" of Prabhakaran being fatally wounded.

Countering the government official's contention, the rebel group distributed pictures showing Prabhakaran delivering the annual Heroes' Day address Nov. 27, the Indo-Asian News Service reported Sunday.

The speculation comes as Sri Lanka's army chief, Lt. Gen. Sarath Fonseka, said there were plans to attack several rebel bases in northern Sri Lanka, noting only 3,000 militants remain in the country.

"We have weakened the (Tamil Tigers) by 50 percent or more and we are confident we can go that extra mile in the coming year," Fonseka said.

CNN-IBN reported Sunday that Fonseka claims security forces occupied rebel defense lines and have them surrounded.

Rajapaksa supported the claims, noting the strategy to defeat the rebels was effective.

"For the last few months it has become very clear that we have a strategy and it is working," Rajapaksa said.