Sri Lanka's military says an intense sea battle erupted Thursday off the island's northern coast when rebels tried to sink a passenger boat with more than 300 civilians on board.
Military officials say they sank at least 16 Tamil Tiger rebel boats during the sea battle and military air strikes. Some boats were packed with explosives.
The military says rebels were trying to attack the passenger ship Green Ocean. There were no immediate reports of civilian casualties.
Tamil Tiger rebels say they captured four Sri Lankan sailors during the incident. At least two naval boats were destroyed.
The battle erupted just as the Sri Lankan government expressed regret for a deadly military attack on a refugee camp that killed at least 60 civilians.
The military deflected blame for the deaths by blaming Tamil rebels and accusing them of using civilians as human shields.
Tamil rebels say dozens were killed and another 125 wounded Tuesday when soldiers shelled a school that houses displaced Tamil civilians in the eastern district of Batticaloa.
Scandinavian truce monitors say they had counted 23 corpses by late Wednesday.
Amnesty International condemned the incident and is urging the government to investigate the attack.
The International Committee of the Red Cross said it deplored the casualties and urged both sides to protect civilians.
Some information for this report was provided by AFP, AP and Reuters.