Nine suspects have been arrested in a bus bombing that killed 26 passengers outside Sri Lanka's capital, Colombo, police said today as air force jets pounded positions of the Tamil rebels blamed for the attack.

The Sri Lankan government and Tamil rebels have signed a permanent ceasefire as a crucial step toward end their 18 year civil war.

Sri Lanka's new government says it is likely to "respond positively" to the Tamil Tiger rebels' declaration of a one-month ceasefire.