By Ranga Sirilal

COLOMBO, April 26 (Reuters) - Sri Lanka arrested nine people on Saturday over a suspected rebel Tamil Tiger bomb that claimed 26 lives on a packed bus in the capital, police said.

The blast in a residential suburb in the Friday evening rush hour follows a bloody week in Sri Lanka, where government forces and Tiger rebels, known as the LTTE, are locked in a violent new chapter of a 25-year civil war.

"This was the latest in a series of indiscriminate attacks by the LTTE aimed at civilians," President Mahinda Rajapaksa said in a statement, adding that the rebels had "many setbacks in battle with the Sri Lankan armed forces in recent weeks".

The president urged greater public vigilance.

"Police have taken nine people into custody for questioning," a police spokesman said. He said the death toll now stood at 26 people including a child and a priest, with more than 60 wounded.

The Liberation Tigers of Tamil Eelam are fighting for an independent state in the north and east where their ethnic minority lives.

The rebels were not immediately available for comment but routinely deny responsibility for such attacks on civilians.

Dozens of rebel fighters and government troops were killed this week in fighting on the Jaffna Peninsula in the far north.

The military said fresh fighting on Friday also killed 21 Tamil Tigers and wounded four soldiers in the northern districts of Vavuniya, Mannar and Polonnaruwa.

Fighting has intensified since the government formally pulled out of a six-year-old ceasefire pact in January, though a renewed civil war has been raging since 2006.

Rajapaksa's government has pledged to destroy the Tigers militarily.

After driving the rebels from the east, the armed forces are focusing on Tiger-held areas in north, intensifying fighting in the civil war that has killed an estimated 70,000 people since 1983. Thousands have been killed in recent months.

When they have come under military pressure in the past the rebels have hit back with bombings in Colombo and elsewhere in the relatively peaceful south of the island.

Analysts say the military has the upper hand in the latest phase of the war, given superior air power, strength of numbers and swathes of terrain captured in the island's east.

But they see no clear final winner. (edited by Richard Meares)

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