The truck exploded at a transit point for security personnel going on leave and those returning to their posts in the restive district of Trincomalee, officials said.
Updated at 7.20pm
COLOMBO: Sri Lanka suffered its worst ever suicide attack on Monday when suspected Tamil Tiger rebels detonated a truck packed with explosives next to a convoy of sailors, killing at least 102 people and wounding 150 more.
The government said the "barbaric" act, which coincided with increased international efforts to restore a 2002 truce, meant the rebel Liberation Tigers of Tamil Eelam (LTTE) was not interested in negotiations scheduled to take place next week in Switzerland.
The bombing occurred about 170 kilometres northeast of Colombo at a transit point for security personnel coming to and from the front line of the drawn-out conflict in the restive northeastern district of Trincomalee.
"Suicide bombers drove a truck packed with explosives into the area where there were about 15 buses," a police official in nearby Sigiriya town said.
"We have two helicopters to evacuate the wounded".
Doctors said that 98 bodies were at the nearby Dambulla hospital while four more people died while being taken by road to a hospital in the major town of Kurunegala.
"This barbaric attack on unarmed sailors shows that the Tigers are not worried about international opinion," said government defence spokesman Keheliya Rambukwella, who is also the minister of policy planning.
"We are keen on negotiations, but the Tigers are not."
The military moved to carry out retaliatory air strikes against the Tigers, but an Israeli-built Kfir war plane crashed shortly after take off from a military base here, officials said.
They said the aircraft crashed into the Negombo lagoon, but the pilot ejected to safety and was rescued by helicopters.
There was no immediate comment from the Tamil Tigers, who last week fiercely resisted a major military onslaught, killing at least 133 soldiers and wounding 500 in two hours of fighting, according to government figures.
The first suicide truck bombing against the security forces was in 1987 when an explosives-laden truck rammed into an army camp on the Jaffna peninsula, killing 40 troops.
Until Monday's attack the worst suicide bombing was against the central bank building in Colombo, killing 91 and wounding 1,400.
Monday's blast came as Sri Lanka's key international backers moved to salvage a 2002 truce and arrange talks later this month.
Top Japanese envoy Yasushi Akashi Monday met with President Mahinda Rajapakse and former chief peace negotiator Nimal Siripala de Silva.
Akashi was also expected to meet top LTTE leaders during his six-day visit, although a sit-down exchange with the Tiger's reclusive commander Velupillai Prabhakaran was unlikely, Japanese officials said.
Norway, the main peace broker in Sri Lanka, was planning to send special envoy Jon Hanssen-Bauer on Tuesday to work out details for the October 28-29 talks in Switzerland.
The Tigers have said they will confirm whether they are participating in the talks when they meet Hanssen-Bauer in the rebel-held town of Kilinochchi on Thursday.
US Assistant Secretary of State Richard Boucher was also expected to meet Thursday with government ministers and civil leaders.
More than 2,300 people have been killed in spiralling violence since December, according to official figures. Both sides have accused each other of sporadic attacks since major clashes last week, including shelling and airstrikes. The navy also said it had sunk a Tiger trawler loaded with arms Sunday.
More than 60,000 people have been killed in the three-decades-old conflict for a Tamil homeland on the Sinhalese-majority island.
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