The Sri Lankan navy says that a gunboat escorting a convoy including a passenger ship has been sunk by separatist Tamil Tiger rebels in a sea-battle off Mullaithivu on the northeastern coast of the island.

The Defence Ministry said the passenger ship turned back because of the fighting.

Tamil Tiger radio said the attack was carried out against warships and ships of supply.

Correspondents say the Sri Lankan authorities transport both civilians and troops by ship between the Jaffna peninsula and the rest of the island to avoid rebel controlled areas.