The explosion on Saturday was the latest in a series of bomb attacks blamed on the Liberation Tigers of Tamil Eelan, a rebel group fighting to create an independent state in the island's north and east.

'The death toll has gone up to 20 and are 50 injured from the explosion,' said military spokesman Brigadier Udaya Nanayakkara. 'The explosion is a work of the LTTE.'

The military said the victims were travelling from the central town of Kandy to the north central town of Anuradhapura to attend a religious ceremony.

Dambulla is around 150km north of the capital Colombo.

The attack came as Sri Lanka was preparing to celebrate the 60th independence from Britain on Monday, and the military had stepped up security over concerns of attacks.

Saturday's blast occurred at a bus station and came about three weeks after a roadside bomb ripped through a civilian bus killing 27 people and wounding dozens in the central town of Buttala.

On Jan 16 a six-year ceasefire between the government and Tamil Tiger rebels officially expired.

The Tigers were not immediately available for comment.

Clashes between the rebels and government troops have escalated since the truce was scrapped last month. The two-decade conflict has killed an estimated 70,000 people. -- REUTERS