The Sri Lankan government has formally called on Britain to ban the organisation, and the Conservative Party will demand an investigation into the Tigers' activities in Britain after the revelation that a film about the guerrillas' recent successful capture of the strategic Elephant Pass army base, in northern Sri Lanka, has been screened at schools and community centres across London and Surrey.
Shown after school hours, the film includes footage of children participating in attacks against Sri Lankan army installations as well as fighters dressed in black - the so-called suicide cadres - who are strapped with explosives and used as human bombs such as that used to assassinate Rajiv Gandhi, the late Indian prime minister.
The film has been shown this month by two state schools in north London, the Copland Community School in Wembley and Nower Hill School in Pinner, although it is not clear if children attended the screenings. According to posters advertising the film, the proceeds of the sale of tickets - at £10 a head - go to the London office of the Liberation Tigers of Tamil Eelam (LTTE). Western intelligence reports say that the money is used to buy arms and explosives for the 17-year-long fight for a separatist homeland for the minority Tamils.
The LTTE is listed by the US State Department as a terrorist organisation and considered to be one of the world's most ruthless guerrilla movements. Britain is one of the few countries in which the organisation is allowed to operate openly.
Peter Hain, the Foreign Office minister, visited Colombo last week for meetings with the Sri Lankan government on ways to resolve the long-running war in which an estimated 62,000 people have died. Lakshman Kadirgamar, the Sri Lankan foreign minister, demanded that Britain outlaw the LTTE under the new Terrorism Act and freeze the organisation's bank accounts.
A Foreign Office official said: "The Home Office list of organisations to be proscribed under the new Act will be issued next year and we cannot predict what will be on their list. But we take note of the Sri Lankan government's concerns."
News that the Tigers have been using British Government-owned buildings for fundraising events is likely to strengthen these demands. Gary Streeter, the shadow spokesman for international development said: "It is quite wrong for premises owned by the state to be used in this way to provide succour for an out and out terrorist group. This is another nail in the coffin in the so-called ethical foreign policy and we demand an immediate investigation."
The LTTE was recently condemned by Carol Bellamy, executive director of Unicef, and Olara Otunu, the United Nations' Special Envoy on Children and Armed Conflict, for the wide-scale use of child soldiers.
An estimated 2,000 children fight for the Tamils, many as young as 12. A report by the Jaffna-based University Teachers for Human Rights detailed how the Tamils pressure children into joining up, rounding them up from schools or withholding rations from their families. The headmaster of one school on the north-east coast said that every family was expected to provide a child for the Tigers' forces and that he was powerless to stop visits by recruiting officers.
The children are trained in the use of grenades and machine guns and used to sneak through enemy lines to lay anti-personnel mines or for suicide waves in which women and children hurl themselves at the enemy, forcing them to trample over their bodies to destroy the morale of the Sri Lankan forces.
That a terrorist organisation condemned internationally for depriving thousands of children of their education should be using British schools to raise money came as a shock to Harrow council where one of the screenings was held this month.
A spokesman for the council confirmed that Nower Hill School had hosted a screening of the film, but said that the event had been described as a cultural evening. She told The Telegraph: "The request for a letting at Nower Hill School was made directly to the school by an organisation that has regularly held a number of cultural events in the past. It was booked as a cultural evening so the school had no reason to believe it would be any different from previous successful events." She added that an inquiry was now under way.
The use of schools for screenings gives the impression that Britain is backing the Tigers, according to Dushy Ranetunge, correspondent for the Island, one of Sri Lanka's leading newspapers. "It is not only much cheaper to use Government-owned buildings than private facilities but also gives the perception of British state patronage," he said.
The British Charity Commission is currently investigating several British-registered charities as front organisations for the Tigers to raise funds tax-free. These include the Tamil Rehabilitation Organisation (TRO), which was recently banned in Canada after being named by the Canadian Senate Committee for Security and Intelligence as a terrorist fundraising front. Last month the Charity Commission raided the TRO and froze its bank accounts while investigating alleged links to terrorists.