The announcement sparked mass celebrations around the country, and people poured into the streets of Colombo dancing and singing.
Prabhakaran's death has been seen as crucial to bringing closure to this war-wracked Indian Ocean island nation. If he had escaped, he could have used his large international smuggling network and the support of Tamil expatriates to spark a new round of guerrilla warfare here. His death in battle could still turn him into a martyr for other Tamil separatists.
While Velupillai Prabhakaran was a hero to some, his group was branded a terrorist organization by the U.S. and European Union, and it was accused of waging hundreds of suicide attacks, including the 1991 assassination of former Indian Prime Minister Rajiv Gandhi by a female bomber. The rebels also forcibly recruited child soldiers.
Sri Lanka's army chief, Lt. Gen. Sareth Fonseka, said on television that his troops routed the last rebels from the northern war zone Monday morning and were working to identify Prabhakaran's body among the dead. But senior military officials confirmed that troops had identified the rebel leader's body.
"We can announce very responsibly that we have liberated the whole country from terrorism," he told state television. It was widely presumed Fonseka was waiting for President Mahinda Rajapaksa to publicly announce Prabhakaran's death.
Rajapaksa confirmed Prabhakaran's death in a phone call to India's External Affairs Minister Pranab Mukherjee, Indian foreign affairs spokesman Vishnu Prakash said in a statement.
Fonseka and the commanders of the other security forces formally informed Rajapaksa of the victory Monday evening in a ceremony broadcast live on television.
The military officials said troops closed in on Prabhakaran and his final cadre early Monday.
He and his top deputies then drove an armor-plated van accompanied by a bus filled with rebel fighters toward approaching Sri Lankan forces, sparking a two-hour firefight, the officials said, speaking on condition of anonymity because they were not authorized to speak to the media.
Troops eventually fired a rocket at the van, ending the battle, they said. In addition to Prabhakaran, the attack also killed Soosai, the head of the rebels' naval wing, and Pottu Amman, the group's feared intelligence commander, the officials said. One of Prabhakaran's sons was also killed, the military said.
Suren Surendiran, a spokesman for the British Tamils' Forum, the largest organization for expatriate Tamils in Britain, said the community was in despair.
"The people are very somber and very saddened. But we are ever determined and resilient to continue our struggle for Eelam," he said, invoking the name of the Tamils hoped-for independent state. "We have to win the freedom and liberation of our people."
But in Colombo, which had suffered countless rebel bombings, people set off fireworks, danced and sang in the streets.
"Myself and most of my friends gathered here have narrowly escaped bombs set off by the Tigers. Some of our friends were not lucky," said Lal Hettige, 47, a businessman celebrating in Colombo's outdoor market. "We are happy today to see the end of that ruthless terrorist organization and its heartless leader. We can live in peace after this."
The chubby, mustachioed Prabhakaran turned what was little more than a street gang in the late 1970s into one of the world's most feared insurgencies. Prabhakaran demanded unwavering loyalty and gave his followers vials of cyanide to wear around their necks and bite into in case of capture. They often used suicide bombings -- a tactic pioneered by groups in Lebanon years earlier but perfected by the rebels.
The rebels demanded a separate state for minority Tamils after years of marginalization at the hands of the Sinhalese majority.
Full-fledged war broke out in 1983 after the rebels killed 13 soldiers in an ambush, sparking anti-Tamil riots that human rights groups say killed as many as 2,000 people. By the time the war ended, more than 70,000 had been killed.
At the height of his power, he controlled a shadow state in northern Sri Lankan that had its own border control, police force, tax system and law school. The rebels feted foreign diplomats at one of the many guest houses they ran in their administrative capital of Kilinochchi. He commanded a force that included an infantry, backed by artillery, a significant naval wing and a nascent air force.
Prabhakaran was renowned as a master strategist, but made a series of fatal miscalculations. The assassination of Gandhi alienated his supporters in India, his stubborn line during negotiations eventually convinced the government it could never reach a peace deal and a Tamil boycott he enforced during the 2005 election ensured the a victory for the hard-line Rajapaksa.
The Tamil Tigers were also badly weakened when one of his top commanders defected along with thousands of fighters to the government side.
Earlier in the day, the military announced it had killed several top rebel leaders, including Prabhakaran's son Charles Anthony, also a rebel leader. The military said special forces also found the bodies of the rebels' political wing leader, Balasingham Nadesan, the head of the rebels' peace secretariat, Seevaratnam Puleedevan, and one of the top military leaders, known as Ramesh.
Government forces ousted the rebels from their strongholds in the north in recent months and brought the group to its knees. Thousands of civilians were reportedly killed in the recent fighting.
Senior diplomats had appealed for a humanitarian cease-fire in recent weeks to safeguard the tens of thousands of civilians trapped in the war zone, but the government refused, and denied persistent reports it was shelling the densely populated war zone.
Diplomats in Brussels said Monday the European Union will endorse a call for an independent war crimes investigation into the killing of civilians in Sri Lanka. The diplomats spoke on condition of anonymity because discussions were ongoing.
The rebels were also accused of using the civilians as human shields and shooting at some who fled.
British Foreign Secretary David Miliband says there have been "very grave allegations" of war crimes on both sides of the conflict adding "they should be properly investigated."
The U.N. said 7,000 civilians were killed in the fighting between Jan. 20 and May 7. Health officials in the area said more than a 1,000 others were killed since then.
On Monday, more than a thousand angry Sri Lankans protested outside the British Embassy in Colombo, pelting it with rocks and eggs and burning an effigy of Miliband and throwing it inside the compound. Protesters held posters calling Miliband a "white Tiger," and several tried to climb the embassy's high walls.
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