At least 200,000 civilians are caught in the crossfire as battles rage in the east [EPA]

The battle, lasting more than four hours, took place off the fishing port of Nachikkudah on Thursday.

Udaya Nanayakkara, a military spokesman, said naval forces sank seven small and three medium-sized Liberation Tigers of Tamil Eelam boats.

Meanwhile, TamilNet, a pro-rebel web site, said the LTTE had repelled a government offensive in the Kilinochchi district, killing 25 soldiers.

The LTTE have been fighting for a separate homeland for minority Tamils in the Indian Ocean island's north and east since 1972.

Sri Lanka blocks journalists from traveling to the frontlines, making it impossible to verify casualty claims.

Civilians trapped

The northern Kilinochchi district, where much of the fighting took place, is a LTTE stronghold.

Mahinda Rajapakse, the Sri Lankan president, said this week that his forces hope to capture the region by December.

The army ejected the rebels from the east of the island last year.

The miltary says the LTTE has lost 6,662 fighters since January and put its own loss at 646 soldiers killed.

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