The capture of the rebel camp in Mannar comes a week after one of the bloodiest battles in the country's long civil war.
"Advancing troops...brought the entire area under control on Wednesday," a spokesman at the Media centre for National security said.
The military said a suspected rebel roadside bomb in central Anuradhapura killed two police commandos, while police retaliation killed two rebels. The military said fighting in the far north a day earlier, killed 25 Tamil Tiger rebels and injured 37 while four solders died and 14 were injured.
After driving the Tamil Tiger rebels from the east, the armed forces are now focused on Tiger-held areas in north, intensifying fighting in a 25-year-old civil war that has killed an estimated 70,000 people since 1983.
Fighting between government forces and the Liberation Tigers of Tamil Eelam (LTTE) has intensified since the government formally pulled out of a 6-year-old ceasefire pact in January, though a renewed civil war has been raging since 2006.
The Tigers, fighting for an independent state in the north and east, were not immediately available for comment on the latest fighting, but said intense military artillery fire killed a civilian in Welioya area on Wenesday.
Analysts say both the government and rebels often inflate enemy death tolls and play down their own losses. The reports are rarely possible to verify independently.
President Mahinda Rajapaksa's government has pledged to destroy the Tigers militarily.
The rebels have hit back with bombings in Colombo and elsewhere in the relatively peaceful south of the island when they have come under military pressure in the past.