The attack in the northern town of Anuradhapura came as the Sri Lankan military appeared on the verge of capturing the Tigers key headquarters as part of a major offensive in the drawn-out ethnic conflict.
"The LTTE (Liberation Tigers of Tamil Eelam) set off a suicide explosion. There are a large number of casualties. At least 27 are dead and 80 injured," military spokesman Brigadier Udaya Nanayakkara was quoted by AFP as saying.
The blast killed the provincial head of the United National Party, retired army general Janaka Perera, who was attending a ceremony to open the offices when the attack occurred.
Officials said it was likely he had been directly targeted by the blast, which left many of the dead slumped beside overturned blue plastic chairs put out for the ribbon-cutting ceremony.
Perera, whose wife was also killed, was a prominent war veteran credited with some of the army’s biggest victories over the Tigers, including a 1996 battle in which 200 rebels were killed with the loss of just one soldier.
The UNP said it was not sure who was responsible, but said Perera had been threatened by the LTTE and government allies including a breakaway Tiger faction that became a political party last year and has been accused of rights abuses.
NO SECURITY DESPITE REQUESTS
"The government had opened up the opportunities to kill him by not providing security despite repeated requests," UNP General Secretary Tissa Attanayake told reporters.
"He was a prominent general who fought against LTTE and is a popular character," Reuters quoted Attanayake as saying.
Perera gained fame after he was credited with turning the tide against a Tiger onslaught that almost saw the government lose control of the northern Jaffna Peninsula in 2000.
Anuradhapura is huge tourist draw and home to some of Sri Lankan Buddhism's holiest sites. For a millennium it was the seat of the kingdom of the Sinhalese, who make up 75 percent of the Indian Ocean Island’s 21 million people.
It has many ancient ruins, but also major military operations to supply the war zone further north.
Every government since independence from Britain in 1948 has been led by the Sinhalese, and Tamils for years have complained of marginalization and broken promises, which helped spark the LTTE-led war in 1983.
The LTTE, among the world's most resilient and ruthless insurgencies, has been blamed for killing many politicians including rival Tamils over the years.
The rebels could not be reached for comment, but have rarely claimed responsibility for such bombings.
The military is on the edge of the Tigers' headquarters town of Kilinochchi, a strategic and symbolic prize in an intensifying war in which the government is growing increasingly confident of a conventional victory.
Fighting on Sunday killed 17 rebels and wounded 30, while one soldier was killed and eight were wounded, the military said. And on Monday, air force jets bombed a strategic Tiger artillery position on the northwestern coast, the air force said.
The prospect of victory has raised fears the rebels will increase their bombing campaign in Colombo and elsewhere in response to losing the turf they have held and ruled for years as a de facto state in the island's north.