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 .
NEW : Sri Lankan President Mahinda Fernando declares victory in civil war . Tamil leader Velupillai is still alive , rebel Web site claims . Sri Lankan government claims Prabhakaran is dead . Rebels have called for an independent state for minority Tamils since 1983 .