Sri Lanka's military admitted Thursday for the first time that Tamil Tiger guerrillas captured one of the country's largest northern towns in a three-day battle in which it says 1,200 people were killed.

Rebels attacked the government stronghold at Kilinochchi in a bid to control a key highway that links the government-held southern section of the Indian Ocean island with the military-controlled northern town of Jaffna.Complete control of the highway could be a turning point in the protracted war. Proceeding inch by inch, the military had wrested two-thirds of it from the rebels since May 1997.

"We have pulled back from Kilinochchi," said Brigadier Sunil Tennekoon, the military's spokesman. "We have vacated the town."

The military's admitted death toll was lower than the figure that journalists had calculated Wednesday from Red Cross reports, hospitals accounts and earlier sketchy reports from the defense ministry.

But the final death toll remained uncertain Thursday. Journalists haven't been allowed near the fighting, and humanitarian organizations are also staying away.

The rebels turned over 600 bodies to the Red Cross on Wednesday, not including 262 soldiers whose bodies the military recovered itself and the 477 rebels that the military said it killed.