COLOMBO (Reuters) - More than 700 children were recruited as soldiers by Sri Lanka's Tamil Tiger rebels last year despite a ceasefire in the island's ethnic war, the U.N. children's agency said on Thursday. In a progress report on a $14 million Action Plan drawn up last year by the government and the Liberation Tigers of Tamil Eelam (LTTE) to help 50,000 war-affected children, UNICEF said the rebels had still not stopped taking children as soldiers.

"In 2003, UNICEF received reports of 709 children recruited by the LTTE and 202 released from the LTTE," UNICEF said.

It said the average age was 15 years, while the youngest recruit was only 10 years old.

The Tigers have admitted recruiting children in the past, but now say they reject underage children who they say flee to them to escape poverty or abuse at the hands of government forces.

Other U.N. groups and the monitors overseeing a Norwegian-brokered ceasefire that was signed nearly two years ago also say forcible recruitment is still taking place.

The issue is considered a litmus test of the sincerity of the LTTE, even though efforts to restart talks to permanently end the two-decade war have stalled amid a power struggle between President Chandrika Kumaratunga and Prime Minister Ranil Wickremesinghe.

But UNICEF said the action plan had put systems in place to help children in the north and east, areas badly ravaged by the war that has killed 64,000.

These include a network of social workers, more access to education and vocational training, and training on children's rights given to LTTE cadres and the police.

A transit centre was also opened in the northern rebel-held town of Kilinochchi in October, through which 55 child soldiers were processed for their return home.

"Substantial work has been done and important foundations have been laid," said UNICEF country representative Ted Chaiban, who added more commitment was needed.

The report said for the Action Plan to succeed in 2004 "the LTTE must cease all recruitment of children... The LTTE must release all child soldiers."

It also said the government has to step up efforts to fill shortages of education and health workers, and increase the rehabilitation of basic infrastructure.

UNICEF said landmines killed 20 children last year, and that access to proper health care was still a major problem.

Peace talks were to have restarted early this year, but the political fight between the president and prime minister, who are elected separately and disagree on the peace process, stopped preliminary negotiations on arranging the talks.