"Sea Tigers", the naval wing of the LTTE, on Sunday attacked the Sri Lankan food ship "City of Liverpool" off the Point Pedro harbour in the northern district of Jaffna.
The hull of the ship was damaged in the 45-minute confrontation between the LTTE and the Sri Lankan Navy's Fast Attack Craft (FACs) which had rushed to its rescue, said Com DKP Dassanayake, the Sri Lankan Naval Spokesman.
"Water began to seep into the ship and the vessel is now being towed to the nearby Kankesanthurai harbour," he told Hindustan Times.
"City of Liverpool" was offloading 1,500 tonnes of flour at Point Pedro when the Sri Lankan navy saw a cluster of 20 LTTE boats heading for the harbour.
The food ship was asked to quit the harbour immediately, and naval craft engaged the attackers about 3 nautical miles off the harbour.
While this was on, about five LTTE boats, including some suicide craft laden with explosives, cut loose and headed for the merchant vessel which was by then in the open sea.
The naval escort personnel on board the merchant vessel kept firing at the attackers in an effort to keep them at bay. But one of the suicide boats exploded very near the vessel, damaging its hull and causing a leak.
Com Dassanayake denied that the vessel was on fire.
Army ambushes fleeing Tigers
Earlier in the day, in Punani in Batticaloa district in East Sri Lanka, government troops killed 18 LTTE cadres, when they ambushed a party of 75 LTTE cadres who were fleeing Vaharai and trying to slip into the Thoppigala jungles.
Poonani is on the A-11 highway between Valachenai-Welikanda.
Among the weapons recovered were a point 50 anti-aircraft gun.
The LTTE has bases in Thoppigala and Karadiyanaru in Batticaloa district. Hard pressed cadres from Vaharai, Verugal and other places are seeking shelter and are believed to be regrouping there.