Ethnic conflict involving the Sri Lankan armed forces and minority Tamil guerrillas in the northern part of this island nation appears to be spreading to other parts of the country, with nearly 300 deaths in one week this month.

Here on the Jaffna peninsula in the north, where most of the minority Tamils live and where the fighting has been the heaviest, Tamil civilians are caught between a pervasive militant presence and what has been described as indiscriminate Army retaliation.

The Palali airport here used to cater to civil air traffic until the end of last year. Now it is an all-military installation with helicopter gunships and helmeted troops with automatic rifles scanning the palm-dotted fields beyond. The airport symbolizes the extent to which the Sri Lankan Army is now beleaguered by the growing guerrilla insurgency.

In the Jaffna peninsula, the militants, estimated to number between 500 to 750, have managed to tie down the 3,000 government forces in the key camps of Palali, Karainagar, Gurunagar and Jaffna Fort.

"There is a real sense of insecurity here," said one prominent member of the Jaffna Citizens' Committee in a telephone interview.

"It's not yet Beirut, but at the present rate of deterioration it soon may well be," commented one western diplomat in Colombo, about 175 miles to the south.

Travel to the Jaffna peninsula, which has been declared a security zone, is severely restricted, but this reporter was permitted to make a one-day visit Monday escorted by Brig. Hamilton Wanasinghe, commander of security forces in the region. Information about the violence was also supplied by diplomats and Sri Lankan politicians, journalists, lawyers and other professionals in Colombo, the capital.

For the past 13 years, this island nation off the southern tip of India has been plagued by the conflict between the separatist Tamils, the predominantly Hindu group in the north, and the majority Sinhalese in the south, most of whom are Buddhists.

Nationwide, 3,000 to 5,000 Tamil guerrillas are fighting the 12,000-man Sri Lankan Army. The guerrillas, many of whom profess Marxist ideology, are seeking to set up a separate state called Eelam in Sri Lanka's Northern and Eastern provinces for the minority Tamils. There are four main guerrilla factions.

The Army is predominantly Sinhalese, the ethnic group that makes up 74 percent of Sri Lanka's 15 million people.

Attacks by the Army on Tamil civilians appear to be a key factor in driving Tamil youths into guerrilla ranks and fanning the general sense of insecurity among the Tamil population.

"The Tamil community now identifies itself much more closely with the militants than in the past," said one former Tamil politician, himself a moderate. "They don't see any other way out."

Recent allegations have focused on a British Broadcasting Corp. report of an alleged massacre May 9 of Tamil civilians by Army troops in the fishing village of Velvettiturai. More than 70 were said to have been killed in that raid, including 25 who were herded into a community center into which Army troops then threw grenades.

The incident is widely believed to have been a factor behind the slaughter of nearly 150 Sinhalese civilians by Tamil terrorists five days later in the north-central town of Anuradhapura, the holy seat of Sinhalese Buddhism.

The Tamil insurgent attack on Anuradhapura was significant because it marked the first time Sinhalese civilians had been targeted by Tamil extremists beyond the boundaries of the area they call Eelam.

Earlier last week, Sri Lankan President Junius Jayewardene said he would declare martial law to combat Tamil separatist guerrillas "if the necessity arises," Reuter reported from Colombo. Meanwhile, The Associated Press reported that hundreds of chanting Buddhist monks demonstrated near Sri Lanka's Parliament Thursday to ask for protection of places of worship after the attack in Anuradhapura.

A day after the Anuradhapura massacre, an attack on Tamil civilians aboard a ferry traveling from the island of Delft to Jaffna was reported. The government has confirmed that 32 men, women and children were killed by assailants in plainclothes armed with knives and axes, and that about 30 more were injured. But it has denied reports that military personnel were involved.

"The Navy commanding officer has made inquiries and is absolutely certain that none of their people were out of station at that time," said Minister of National Security Lalith Athulathmudali at a press conference. The Army also has denied that any excesses took place at the fishing village of Velvettiturai.

Brig. Wanasinghe said he knew nothing of the reported community center killings. In an interview at his headquarters at the Palali airport, he said that during a cordon-and-search operation, an Army major was killed and a total of 27 Tamils died, six of whom were confirmed as terrorists following Army intercepts of insurgent radio communications.

Conceding that civilian casualties "may have been high," he said this was because "troops are not going to take a chance" in a situation in which terrorists and civilians are virtually indistinguishable. Stories of a massacre, he added, were "false and fabricated."

Political observers of both communities in Colombo call official disclaimers unconvincing. Regarding the ferry attack, Tamil sources pointed out that no Sinhalese civilians live on the Tamil-populated islands and it was "utterly implausible" that Tamil civilians would have attacked members of their own community so brutally.

Many observers argue the massacre was retaliation by Sinhalese Navy men for the Anuradhapura killings.

"It's now simple tit-for-tat," said one western diplomat.

Since the December breakdown of a government-sponsored all-party conference aimed at negotiating a solution to grievances among the island's 1.9 million indigenous Tamils, unrest has also spread to the Eastern Province, inhabited by a mix of Moslems, Hindu Tamils and majority Buddhist Sinhalese.

The most striking index of insurgent confidence, according to Athulathmudali, has been a shift from hit-and-run harassment of security forces to frontal assaults on police stations and Army camps, backed by homemade mortars and rocket-propelled grenades.

Growing coordination among the different extremist factions is also giving the government concern.

"Some of these groups have got together and when they come for attacks are using larger numbers of men," said Wanasinghe. Insurgent attacks are now made in units of up to 100, he said.

An April 10 attack on a Jaffna police station in which four policemen died and the building was largely destroyed was one example of militant tactics, he said.

Since then, assaults have been launched on the Karainangar naval base, 12 miles northwest of the town of Jaffna, which was pounded by mortar fire from May 3 to May 4; the Gurunagar Army camp in the town, attacked the same night; an Army camp at Kokavil, 18 miles south of the peninsula, and the police station at Mannar on the northwest coast, overrun May 10.

Police stations have been relatively easy targets, with the defenders generally fleeing after only brief resistance. The insurgents have yet to overrun an Army camp, something political and diplomatic observers say they are planning in a bid to give their campaign a major psychological and propaganda boost.

On the Jaffna peninsula, where Army forces are confined to their camps, movement between the strong points is almost entirely by helicopter.

Electronically detonated mines, generally simple but massive charges of high explosive buried beneath road surfaces, have proved highly effective in reducing Army mobility.

"If we have to get from A to B we can," said Brig. Gen. Nalin Seneviratne, commander of Sri Lanka's Army. "But movement is slowed down because we have to clear the roads."

When security forces do venture beyond their camps, they move in force to conduct what are called cordon-and-search operations, set up roadblocks, conduct house-to-house searches and return to their garrisons at night.

The impression among informed Sri Lankans of both communities is also that the government is covering up for the excesses of a military it will not or cannot control. The result, it is argued, is a situation in which a censored press provides the majority Sinhalese community only with accounts of Tamil attacks while avoiding discussion of excesses by the Sinhalese military.

"The government has studiously avoided telling people in the south what is happening in the north," said one Asian diplomat.

While some troops have been discharged from the Army for alleged killings, none has been brought to trial, and there have been no independent inquiries. The government has cited lack of sufficient evidence to secure convictions. But some observers, including a prominent Tamil lawyer, said the failure to bring errant soldiers to justice has led to a steady erosion of professional standards in the forces and a sense that, as the lawyer put it, "they can get away with anything."

The small, inexperienced Army that has traditionally fulfilled ceremonial duties is also ill-equipped for its current role.

The root of the problem, many diplomats and Sri Lankan professionals said, is the government's unwillingness to risk antagonizing an Army that, for all its shortcomings, is the only tool at its disposal to tackle a growing insurgency.