The attack, which took place around 3.30 am, badly damaged the ship which began sinking rapidly. The jetty to which it was secured was also reported to be extensively damaged.

There were no passengers on the ship at the time of the attack which was berthed at the pier after its run last evening from Muthur, a coastal village in the southern Trincomalee bay.

Navy divers, who began examining the wreckage of the ship on Monday morning, reported finding a wet suit, flippers and an oxygen cylinder near the site.

The LTTE had carried out a similar, but more devastating, attack in April 1995, when divers of the Sea Tigers blasted two gunboats inside the naval dockyard by planting limpet mines on the two vessels.

Investigators are still unsureabout the LTTE's motives for attacking the privately-owned MV Newco Endurance, a rejected troop carrier which was used to ferry civilians and goods from Muthur to Trincomalee despite its dilapidated state.

A government communique on Sunday lashed out at the LTTE for ``creating hardships'' for Tamil civilians by blasting the ship that offered ``better comfort and quick travelling'' between Trincomalee and villages further south in the bay.

``This boat has the capacity of accommodating 310 passengers. With this blast, the people of those areas are badly affected in many ways, especially the children who come from Trincomalee south to Trincomalee for education, and people who come to Trincomalee for official and business matters...'' the communique said.