A bomb tore through a crowded New Year's concert in Indonesia's Aceh province (search), killing 10 people -- including three children -- and challenging government claims that security in the restive region is improving.

Wednesday's blast, which also wounded 45 people, was the bloodiest bombing in Aceh since the government on May 19 abandoned a six-month truce and launched a military offensive against the rebels.

Authorities accused separatist guerrillas of the bombing -- a claim denied by the insurgents, who have been fighting since 1976 for independence for their oil-and gas-rich province on the northern tip of Sumatra island (search).

The bombing came as Jakarta undertakes a massive military offensive to crush the insurgency, one of several in remote regions of Indonesia that threaten to break up the sprawling archipelago in the Indian Ocean.

Shortly after Wednesday's blast, President Megawati Sukarnoputri (search) declared that the offensive -- launched May 19 after a six-month truce broke down -- was bringing peace to Aceh.

"We have succeeded in calming down many upheavals and conflicts among ethnic groups ... in several regions, which have almost torn apart our nation," she said in the prerecorded message shown on state television.

In apparent reference to the rebel Free Aceh Movement (search), Megawati said, "Even if it is painful, we had to take harsh measures and we have successfully curtailed the movement, which is trying to separate from Indonesia."

Wednesday's bomb detonated at about 9 p.m. as a pop band played to hundreds of revelers on a soccer field in the eastern town of Peureulak, authorities and witnesses said.

The device apparently was hidden under the stage and triggered by a timer.

"Three girls were singing up there when there was a huge blast. I saw six people die in front of me. Blood was trickling down my legs," said one victim, Zulkifli, who, like many Indonesians, uses a single name. "Dozens of people were running in panic."

Many of those killed were teenagers and children, including a 7-year-old boy, a 4-year-old girl and a 1-year-old girl, hospital workers said.

Military spokesman Lt. Col. Ahmad Yani Basuki blamed rebels for the attack.

"It was a powerful bomb," he said. "The rebels always do such (terror). There is no one else who can do that. Peureulak is a rebel stronghold."

The insurgents have no history of targeting civilians or leaving bombs in public places. The poorly armed fighters, believed to number about 5,000 before the current offensive began, are known for launching hit-and-run attacks on security posts.

"We have never staged an attack to kill our own people," insurgent spokesman Sofyan Dawood said, adding: "The party was organized by the military. They lured people to go there."

The bombing capped a bloody year for Aceh's 4.3 million people.

The military has killed more than 1,300 alleged rebels since the latest crackdown began.

The insurgents claim most of those victims were villagers targeted for supporting the rebellion.

Last month, U.S.-based Human Rights Watch accused troops in Aceh of widespread abuses, including executions, torture and arbitrary arrests. It also said the province should be opened immediately to independent monitors.

Successive brutal military campaigns have only succeeded in fueling the rebellion on the northern tip of Sumatra, about 1,100 miles northwest of Jakarta.

The rebels launched their independence bid 27 years ago after Jakarta refused to give increased autonomy to the province. At least 12,000 people have died in the conflict.

The most recent effort to settle the conflict, a truce mediated last year by the Geneva-based Henry Dunant Center, collapsed in May amid mutual mistrust.

Most Acehnese support independence and want the government to allow a referendum similar to the 1999 U.N.-monitored vote that led to independence for the province of East Timor.