Roland Buerk Colombo Correspondent

The military had earlier claimed there were no casualties when a rebel aircraft dropped two bombs.

The attack came as soldiers continue to push into territory held by the Tamil Tigers in the north of the island.

People in Trincomalee said they saw ambulances moving through the town after the air raid.

At least one Tamil Tiger plane had dropped two bombs on the navy base in the town.

The Ministry of Defence at first said there were no casualties, but later admitted a number of sailors had been wounded.

A spokesman, Brigadier Udaya Nanayakkara insisted that no ships or buildings were damaged in the raid. He denied reports from people in the town of a second alert - with more heavy anti-aircraft fire - three hours after the attack.

The huge natural harbour at Trincomalee is a key strategic base for Sri Lanka's navy.

From there troops are deployed by ferry escorted by gunboats to Government-controlled Jaffna.

Land routes to the far northern peninsular are cut off by territory held by the Tigers, who want a separate state for the Tamil minority.

The Tigers' tiny air wing, used only occasionally since its first attack in March last year, has been a source of frustration for Sri Lanka's military.

Anti-aircraft batteries, and the supersonic jets of the Air Force, have been unable to shoot down the rebels' light-weight propeller-driven planes.