Military officials in Sri Lanka say at least six navy sailors and 25 Tamil Tiger rebels have been killed in a clash along the northwestern coast.
A military spokesman says the navy destroyed eight of 11 Tiger boats in Saturday's fighting, with damage to three of their own vessels.
The spokesman says the navy called for air support in what was described as a major battle in the Mannar district.
Also Saturday, government officials and rebels accused each other of attacking a church in Mannar where civilians had taken shelter.
In another development, officials say three suspected rebels dressed in diving suits were arrested while trying to lay mines in waters off the island's coast. Authorities say the three were taken to the hospital after taking cyanide to avoid arrest.
Sri Lankan aircraft bombed a key rebel stronghold near Kilinochchi Thursday and Friday, following a landmine blast on a passenger bus that killed 64 people Thursday.
The military blamed the attack on Sri Lanka's main rebel group, which has denied responsibility for the blast.
The recent unrest has raised concerns about Sri Lanka's faltering peace process. Rebel leaders say the air strikes indicate the government is ready for war.
Sri Lankan President Mahinda Rajapakse has said he remains committed to the country's 2002 ceasefire agreement.