The military called in jets to bomb suspected Tamil Tiger positions after the sinkings at two locations along the northern seaboard while the navy engaged coastal bases of the Tigers elsewhere, military sources said.
The Liberation Tigers of Tamil Eelam (LTTE) sank a fast attack craft escorting the troop carrier MV Pearl Cruiser and another one at Point Pedro, spokeswoman for the monitors, Helen Olafsdottir, told AFP.
"They are now attacking Pearl Cruiser and are putting the lives of our monitors in danger," Olafsdottir said, adding that members of the Scandinavian Sri Lanka Monitoring Mission (SLMM) had three close calls Thursday.
It was not known how many monitors were travelling aboard the ferry taking troops from the northeastern port of Trincomalee to the Jaffna peninsula in the north.
After a three-hour sea battle, the Tiger flotilla involved in the firefight was seen withdrawing towards the coast, military sources said, as Israeli-built Kfir jets pounded rebel coastal positions.