The Special Task Force (STF) of the police seized the Janak camp of the Liberation Tigers of Tamil Eelam (LTTE) in the Ampara district in the morning and two STF personnel were injured in the confrontation, said the Media Center for National Security in a statement.
According to the statement, the Janak camp is situated west of the recently overrun Stanly base, the LTTE's biggest camp in the Ampara district.
"The capture of LTTE's Stanly and the Janak camps is a strategic step forward in eliminating the terrorist threat on security forces camps in the east," said the statement.
The STF said a large factory where uniforms were stitched for LTTE cadres had been situated inside the Janak camp. Mortar cycles and other vehicles had also been recovered from within the camp.
Sri Lanka's Army Chief Sarath Fonseka said earlier that the military was determined to liberate the east from the LTTE and later focus on the north.
Conflict between the government troops and the LTTE has been escalating since December 2005, with more than 3800 people being killed.
The Norwegian backed peace process and the truce agreement signed between the two parties in 2002 are currently stalled as a result of the violence.