COLOMBO, Sri Lanka (CNN) -- Sri Lankan President Mahinda Rajapaksa, flashing a broad smile, declared victory Tuesday in the country's 25-year civil war against the Tamil Tiger rebels.
A crowd beside a portrait of Sri Lanka's president celebrate the country's military victory on May 18.
"We are celebrating the defeat of terrorism," he said in a nationally televised speech before parliament. "We have won and restored democracy in the country."
Rajapaksa announced that Wednesday would be a national holiday, to celebrate the war's end and begin a new phase in the country's history.
It is time for Sri Lanka to build "a new country ... a new nation," he said, calling "the defeat of Tamil terrorism ... a victory for the Tamil people."
"What have they given the Tamil people?" Rajapaksa asked, suggesting that the war had cost them far more than they had gained. With the war over, he said, Sri Lanka would begin to restore government services to Tamil areas.
The United Nations, meanwhile, urged the government to provide more for the 65,000 people who had fled the last fighting in the past few days. It said there were now 265,000 displaced people in the country.
A short time after the presidential address, the military announced that it had recovered the body of Tamil Tiger founder and leader Velupillai Prabhakaran. A local television station aired video it said showed his body.
The "psychopathic leader of the world's most barbaric terrorist outfit ... has been found," confirmed Gen. Sarath Fonseka, commander of the Sri Lankan army, according to the Ministry of Defense Web site. "Troops ... have found the bullet ridden body of the terrorist leader lying on the bank of the Nanthikadal lagoon," the ministry reported. Watch more on aftermath of fighting »
But earlier in the day, the pro-rebel Web site Tamilnet.com reported that the Tigers' leader was "alive and safe," countering previous military claims.
The defense ministry said Prabhakaran and 18 other senior rebel leaders were among the bodies found in mop-up operations, after government troops routed the Tigers -- formally known as the Liberation Tigers of Tamil Eelam.
The leaders included Prabhakaran's eldest son, Charles Anthony, as well as Pottu Amman, the Tigers' intelligence leader, according to the ministry.
"Our beloved leader Velupillai is alive and safe," rebel spokesman Selvarasa Pathmanathan said, according to Tamilnet.com. "He will continue to lead the quest for dignity and freedom for the Tamil people."
CNN has been unable to independently confirm the accounts because of access and safety reasons.
News of Prabhakaran's death was greeted with pro-Tamil marches elsewhere in the world, with around 2,000 gathering outside parliament in London and others protesting in front of the White House in Washington.
Prabhakaran founded the rebel group, which has been declared a terrorist organization by 32 countries. It pioneered the use of women in suicide attacks and, according to the FBI, invented the explosive suicide belt.
It was also behind the assassination of two world leaders -- the only terrorist organization to do so.
Prabhakaran is accused of masterminding the killing of former Indian Prime Minister Rajiv Gandhi in 1991 in the Tamil-dominated Indian state of Tami Nadu as he campaigned for a second term. Sri Lankan authorities allege that Prabhakaran was avenging Gandhi's decision to send Indian peacekeepers to Sri Lanka.
Two years later a Tigers suicide bomber, allegedly acting under Prabhakaran's orders, detonated explosives that killed Sri Lanka's then-president, Ranasinghe Premadasa, during a rally.
Over the weekend, the militants offered to "silence" their guns after an intense military offensive decimated their ranks, pushed them from their stronghold in the north and east of the country, and cornered the remaining rebels on a small stretch of land. Watch aid agencies fear for Sri Lanka »
Prabhakaran's supporters considered him a hero with a single-minded focus -- to fight for the rights of his people. The Sri Lankan government deemed him a war criminal with a disregard for civilian casualties. He was wanted by Interpol on charges including terrorism and organized crime.
In the past it has been reported he wore a cyanide capsule around his neck -- to swallow and kill himself rather than risk capture. And he reportedly expected the same dedication from his troops. As a result, few Tigers have been captured alive.
The rebels have fought for an independent state for minority Tamils in Sri Lanka since July 1983. An estimated 70,000 to 80,000 people have died during the quarter century of fighting.
Journalist Iqbal Athas contributed to this report.