Thanks for the suggestions. The gaps are between 500-1000bp so it looks like the sequence data won't span these gaps because of the repeats in the genome. We do have a reference strain from the same species but there seems to be lot of recombination between the two genomes. I guess it's worth a look for some of the regions which look like there is no recombination. I tried AMOScmp as an alternative assembler but this produced a much large number of contigs compared with newbler.
I'll try consed and autofinish too but I'm still waiting for the software.