The military said it had destroyed many boats in Friday's raid on the yard in the northern Jaffna peninsula where the guerrillas were building boats to launch seaborne attacks on security forces.
"They have destroyed many Tiger boats. There were 30 to 40 boats there and 90 percent of the fleet is destroyed and damaged," said defence ministry spokesman Major Upali Rajapakse.
The rebel-supporting website Tamilnet.com said two workers were wounded when at least four bombs were dropped on what they said was a civilian boat-building yard.
The military, holding the northern part of the besieged peninsula, has been forced to reinforce by bringing in supplies by ship.
Officials said attack boats disguised as fishing vessels had been used to attack the Sri Lankan navy.
The peninsula, held in part by both sides, has been the scene of fierce clashes over the last week which have left 350 rebels and some 150 soldiers dead, according to defence ministry officials and military sources.
M