By Ranga Sirilal

COLOMBO, Dec 8 (Reuters) - Sri Lanka's military said on Monday soldiers had resumed attacks on the outskirts of the rebel Liberation Tigers of Tamil Eelam's (LTTE) self-declared capital of Kilinochchi.

The battle for Kilinochchi has picked up pace in recent days after monsoon rains slowed a multi-pronged assault that had been energised by the army's Oct. 15 capture of the entire western coast for the first time since 1993.

"Troops in Kilinochchi are targeting the town and they are in the vicinity of the town," military spokesman Brigadier Udaya Nanayakkara said on Monday.

The LTTE could not be reached for comment. Independent confirmation is all but impossible because both sides limit media access to the war zone. The military has been saying it is near Kilinochchi since September.

On Sunday, the Defence Ministry website www.defence.lk said rebels had put up stiff resistance against soldiers positioned within "kissing distance" of the outer defences of Kilinochchi, 330 km (205 miles) north of the capital Colombo.

Troops captured two bunkers and the air force carried out air strikes in the Kilinochchi area at the weekend, the military said. Further east, soldiers were battling toward the other major Tiger stronghold, the eastern port of Mullaittivu.

Kilinochchi is a strategic prize for the Sri Lankan military, which is increasingly confident of winning the 25-year war, and is also of symbolic importance to the LTTE's aspirations to create a separate state for minority ethnic Tamils.

President Mahinda Rajapaksa's government has made the most military progress of any in the conflict so far, and allies have urged him to capitalise on those successes by calling early elections to consolidate his power.

On Monday, his 2009 budget, with record defence spending and several populist measures, was due for a final vote in parliament. Rajapaksa's ruling United People's Freedom Alliance has enough votes to push it through easily.

The main opposition United National Party on Monday submitted a no-confidence motion but government allies responded by saying they would happily take it up.

Defence spending in the budget was forecast to grow as much as a fifth to 200 billion rupees ($1.82 billion), the highest in Sri Lankan history.

Tourism officials said on Monday tourist arrivals fell 18.2 percent in November from a year ago as the global financial crisis and intensified fighting kept visitors away.

LTTE leader Vellupillai Prabhakaran said in his annual address last month Sri Lanka was living in a "dreamland" if it thought it would achieve victory. Analysts say the LTTE, on U.S., E.U. and Indian terrorism lists, is on the defensive.

Since 1983, the Tigers have fought to create a separate homeland for Sri Lanka's minority Tamils, many of whom have complained of discrimination by governments led by the Sinhalese ethnic majority for all 60 years since independence from Britain. (Editing by Bryson Hull and Paul Tait)

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