"We talk about approximately a quarter of a million persons who are fundamentally trapped in a very small restricted perimeter - 250 sq km [96 sq m] - which is the theatre of very intense combat," he said.
"They find themselves simply under fire and highly vulnerable. Access to medical care is almost non-existent at this point. They are in need of food, they are in need of shelter and most of all they are in need of security."
The ICRC based its figure of hundreds dead on body counts by its staff in local hospitals.
Access for aid workers was so limited, it said, that the ICRC's own presence in the region was virtually meaningless.
The ICRC wanted to evacuate 200 critically wounded people on Tuesday but did not receive security clearance.
Those patients, it says, now face death.
The UN secretary general and the European Union have also expressed deep concern for civilians caught in the fighting.
The military did take a group of journalists, including the BBC's Chris Morris, to the region on Tuesday.
Brig Nandana Udawatte, who led the capture of Mullaitivu, said that "mortar fire, indirect fire and close-quarter battles" were going on 1.5 km from the town of Puthukkudiyiruppu.
Pro-rebel sources have previously accused the army of killing hundreds of civilians with shellfire - allegations the military denies.
Our correspondent says that apart from soldiers on every corner in Mullaitivu, it is a ghost town. Most of the buildings, houses and shops are damaged or destroyed.
He says its capture is a big victory for the army but that the Tigers also appear on the surface undaunted, with the sound of artillery fire not that far away echoing down the empty streets.