The killing comes after the assassination of dozens of ethnic Tamils who opposed the separatist guerrilla group.
The actual numbers of ethnic Tamils are usually double this amount and could be estimated at around 100,000.
The rebellion has been led by groups of ethnic Tamils who make up less than 15 percent of the island's population.
The rebels are also implicated in a rash of assassinations, in particular attacks on ethnic Tamils who work with the state.
Other survivors say ethnic Tamils and Moslems were freed by the guerrillas before opening fire.
Hundreds of people, largely ethnic Tamils, are reported to have been abducted across the country over the last several months.
India has dispatched 20,000 soldiers, many of them ethnic Tamils, to enforce the agreement signed by the two countries July 29.
The key is a new constitution intended to re-engage the loyalties of the three million ethnic Tamils.
An ethnic Tamil like most of the tea workers, he uses only one name.
Although it is not known when ethnic Tamils first settled in Sri Lanka.