The Sri Lankan government says it is planning victory celebrations and is drawing up an economic plan for the east of the country, where troops have captured a Tamil Tiger stronghold. But as Anjana Pasricha reports from New Delhi, the rebels have vowed retaliation.

The government says it will mark the army's success in driving Tamil Tiger rebels out of their eastern bases with victory celebrations and an ambitious reconstruction plan for the area.

The plan, called "Eastern Revival" will be inaugurated July 19.

The Sri Lanka military captured the last rebel stronghold in the east on Wednesday, enabling the government to establish control over the entire eastern province for the first time in 15 years.

A Tamil Tiger fighter with machine gun bullets around his neck at a training camp in an undisclosed location deep in Tiger controlled territory, northeast of Colombo, Sri Lanka, 13 July 2007

Tamil Tiger guerrillas admit they have lost territory in the east, but vow to retaliate.

A rebel spokesman, Rasiah Ilanthirayan, says the Tigers will continue to put up resistance.

"That does not mean that we have quit in the east," he said. "We have switched mode of operating, our modus operandi…. We are there, and our command is there, our structure is there, and we continue to operate."

Another Tamil Tiger leader has warned that the group will hit economic and military targets to weaken the government's military capacity.

Defense analysts say that capturing rebel strongholds in the east marks an important success for the military, but holding the region will not be easy. They say rebel fighters hidden among villagers could continue attacking soldiers.

All eyes are now turned to the north of the country, which is the main stronghold of the rebels.

Head of Colombo's National Peace Council, Jehan Perera says routing the Tamil Tigers in the east was relatively easy because a split in the rebel ranks in the area had weakened them. But he says the military strength of the rebels, who are also known as the LTTE, is still intact in the north.

"In the north the LTTE is still very unified as far as we can see," he said. "Also the troops from the east, the LTTE forces, now have moved to the north to consolidate the northern defenses."

The Tamil Tigers campaign for an autonomous homeland for the minority Tamil community erupted in 1983 on complaints that they suffer discrimination at the hands of the majority Sinhalese community. More than 70,000 people have died in the fighting since then.