Up to 30 people were killed in heavy fighting between Sri Lanka's Tamil Tigers and government forces today.
Sri Lankan government jets hit targets near the Liberation Tigers of Tamil Eelam (LTTE) stronghold Kilinochchi for a second night, retaliating for an attack on a bus earlier in the week that killed 64.
The Tigers deny the bus attack.
Police in the northwest Mannar district said the attack on naval craft and security forces positions in the early hours of the morning was one of the most serious sea engagements and the most serious land action since a 2002 ceasefire.
"Eight LTTE boats destroyed," said a spokesman for the defence ministry said. "They came by land and sea."
The military said six navy personnel were killed along with one civilian, and around 25 Tigers were killed - reducing their estimate from an earlier 30.
Local police said five civilians had been killed and more servicemen were missing.
The unarmed Nordic mission monitoring the now battered ceasefire said they believed 11 navy sailors were killed.
Each side blamed the other for hitting a church that was sheltering civilians trying to flee the conflict to India. The military said rebels had thrown grenades into it as they withdrew, wounding civilians.
But rebel media coordinator Daya Master said the military was responsible. Military and rebel sources said other front lines appeared to be quiet.
There has been a sharp increase in violence since early April and almost 700 people have died this year. Violence has largely been confined to the north and east, where the Tigers want a separate Tamil homeland, but there have been two blasts in the capital.
Meanwhile, three suspected rebel frogmen were seized on a beach near the capital's airport.
All were arrested, but two took cyanide capsules and were taken to hospital. During the arrests, a large underwater explosion a few metres off the beach shattered nearby windows.
A witness who refused to be named said: "It was just off the reef. It sprayed water for a 50-metre radius."