The Tamil Tigers are admitting defeat in their fierce quarter-century war for a separate homeland as government forces race to clear the last pockets of rebel resistance from the war zone in the north.

Far from the battlefield, thousands of Sri Lankans danced Sunday in the streets of Colombo, celebrating the stunning collapse of one of the world's most sophisticated insurgencies. But with rebel leader Velupillai Prabhakaran still at large, the threat of renewed guerrilla warfare remained.

Several rebel fighters committed suicide when they were surrounded, but it wasn't clear whether Prabhakaran or other leaders were among them.

The Tamil Tigers once controlled a shadow state complete with courts, police and a tax system across a wide swath of the north. By Sunday, government troops had surrounded the remaining rebels in a 0.4-square-mile patch of land and were fighting off suicide bombs and other attacks, the military said.

Huge clouds of black smoke rose over the battlefield as soldiers inspected the charred remains of rebel trucks and heavy artillery pieces, according to footage broadcast on state television. Civilians carrying backpacks and rolling suitcases were escorted from the area.

Military spokesman Brig. Udaya Nanayakkara said the civilians who had been trapped in the war zone — 63,000 in all — fled to safety during the past 72 hours. But rebel official Selvarasa Pathmanathan said the bodies of thousands of wounded and slain civilians lay strewn across the war zone.

"This battle has reached its bitter end," Pathmanathan said in a statement e-mailed to The Associated Press. "It is our people who are dying now from bombs, shells, illness and hunger. We cannot permit any more harm to befall them. We remain with one last choice — to remove the last weak excuse of the enemy for killing our people. We have decided to silence our guns."

Media Minister Anura Yapa dismissed the appeal. "We want to free this country from the terrorist LTTE," he said, referring to the group by its formal name, the Liberation Tigers of Tamil Eelam.

The military spokesman denied the rebels had laid down their weapons. "Fighting is still going on in small pockets," Nanayakkara said.

Rights groups have accused the rebels of holding civilians as human shields, and blamed the government for shelling the densely populated area where they sought refuge. Both sides denied the accusations.

With most journalists and aid workers barred from the war zone, it was not possible to verify the accounts of either side. Health officials in the area have said thousands of civilians were killed in shelling since the beginning of the year.

The rebels have been fighting since 1983 for a separate state for Sri Lanka's ethnic Tamil minority after years of marginalization at the hands of the Sinhalese majority. More than 70,000 people have been killed in the fighting.

President Mahinda Rajapaksa has said that after defeating the rebels, his government will begin talks toward power sharing and political reconciliation between the two communities. But many Tamils are skeptical that the victorious government will be willing to make real concessions.

At their height, the rebels controlled 5,400 square miles nearly one-fifth of this Indian Ocean island nation.

They had a conventional army complete with artillery batteries, a large navy and even a nascent air force, funded by an estimated $200 million to $300 million a year they made from smuggling, fraud and appeals to Tamil expatriates. They also carried out hundreds of suicide attacks — including the 1991 assassination of former Indian Prime Minister Rajiv Gandhi — and were listed as a terror group by the U.S., European Union and India.

A 2002 cease-fire briefly halted the fighting, but it broke down more than three years ago, and Rajapaksa vowed to destroy the rebels. With victory all but assured, Rajapaksa raced home from a trip abroad and was blessed at the airport Sunday morning by Buddhist, Catholic, Hindu and Muslim clerics. He scheduled a nationally televised news conference for Tuesday morning at Parliament.

Sri Lankans poured into the streets of the capital, Colombo, lighting firecrackers, dancing to the beat of traditional drums, waving the flag and hugging soldiers.

"We all will be able to live in peace in our motherland again," said Jinadasa Liyanage, 26.

Yet the fate of Prabhakaran, the founder and unquestioned leader of the Tamil Tigers, and his top deputies remained unclear.

A senior military official said troops found the bodies of several rebel fighters who had committed suicide Sunday when troops surrounded them. The bodies were suspected of being Prabhakaran and his deputies, but the military was still trying to confirm their identities, the official said, speaking on condition of anonymity because he was not authorized to speak to the media.

The portly, mustachioed Prabhakaran led the Tamil Tigers for more than three decades, transforming it from little more than a street gang into a feared guerrilla group. He is seen as the heart and soul of the movement.

The rebels have said that if they lost the conventional war they would return to their guerrilla roots.

The war zone was wracked by chaos Sunday, as troops sought to mop up the final pockets of resistance, Nanayakkara said. At least one suicide bomber attacked troops in the morning, the latest in a wave of rebel attacks on the advancing forces in recent days, he said. Troops killed at least 70 rebels trying to flee by boat, the military said.