COLOMBO (Reuters) - Nearly 400 people fled Sri Lanka's shrinking war zone and a wounded cabinet minister regained consciousness after a suicide bombing blamed on the cornered Tamil Tiger rebels, officials said Wednesday.

Sri Lanka's military has encircled the Liberation Tigers of Tamil Eelam (LTTE) in a mere 37 sq km (15 sq miles) on the island nation's northeastern coast and is fighting to finish a separatist war that has raged off and on since 1983.

Troops killed 16 LTTE fighters in battles Tuesday and Wednesday, military spokesman Brigadier Udaya Nanayakkara said.

The Tigers could not be reached for comment. The pro-LTTE web site www.TamilNet.com quoted an unidentified rebel official as saying fighters Tuesday blew up six army artillery positions 18 km behind the front, and killed 50 soldiers in the assault.

Nanayakkara denied the report: We just don't allow those gun positions to come under attack. They are well-protected even when they are far from the fighting.

Soldiers received 378 fleeing Tamil civilians Tuesday, bringing the total to 1,054 since Friday, he said. Nearly all of the 38,900 who fled this year came out in a single spurt in early February when troops reached an older no-fire zone.

There are tens of thousands still in the war zone. Aid agencies, rights groups and the government have urged the LTTE to stop holding them by force as human shields. The government says 70,000 are there, while the Red Cross says there are 150,000.

The Tigers insist people are staying out of choice and accuse the government of intentionally shelling civilians, which the military denies. It says troops have slowed their offensive to protect people.

The government has rejected a Tiger ceasefire call as a ploy to buy time to re-arm, and pledged safe passage to civilians.

Although few doubt the military shortly will destroy the Tigers as a conventional force, few also expect the group to stop carrying out unconventional attacks like a suicide bombing that killed 14 in southern Sri Lanka Tuesday.

WOUNDED MINISTER

Post and Telecommunications Minister Mahinda Wijesekara on Wednesday came off of life support but remained in intensive care at a Colombo hospital. He was among 35 wounded in the blast outside a mosque in Godapitiya, blamed on the LTTE.

Doctors are happy with his condition and he is on the path of recovery, Colombo National Hospital director Dr. Hector Weerasinghe said.

The attack targeted a group of six ministers at a Muslim celebration. Wijesekara was the only minister hurt.

The LTTE has not commented on the explosion. It rarely admits to such attacks despite proving the effectiveness of using the suicide blast as a weapon of war and inventing the suicide jacket, an explosives-laden vest.

The Tigers' use of hundreds of suicide bombings over the 25-year war has landed them on U.S., EU, Canadian and Indian terrorist lists. It also has created a high-security environment where Tamils are closely scrutinized by the military.

The government says the checks are necessary because the Tigers repeatedly have used people disguised as civilians -- particularly women -- to carry out the attacks.

Many Tamils say that scrutiny contributes to feelings of marginalization. The minority group has long complained that successive governments led by the Sinhalese majority have sidelined them since independence from Britain in 1948.

(Additional reporting by Ranga Sirilal; Editing by Sanjeev Miglani)