Tamil Tiger rebels blew up an army bus in the Sri Lankan capital Colombo on Thursday, killing two soldiers just hours after the guerrillas said they had overrun a naval base in the north and killed 35 sailors.

The Tigers blew up a motorcycle packed with explosives as the military bus passed Colombo's Pettah commercial district just outside the capital's main harbour, the police said.

Two soldiers were killed instantly, while five others were wounded and taken to hospital for treatment, police said.

The Colombo attack came just hours after the Liberation Tigers of Tamil Eelam staged a pre-dawn raid on a strategic naval base at Delft, an islet off the northern Jaffna peninsula, claiming to have killed 35 sailors.

"During a search operation, we found 35 bodies of Sri Lankan sailors and weapons. We lost only four of our cadres," Tiger spokesman Rasiah Ilanthiriyan said from the rebel-held Wanni region.

The Sri Lankan military confirmed the rebel attack, saying the Tigers had used about 15 boats, including three so-called suicide boats, but the army provided no details about casualties.

Military sources said they had information about eight or 10 sailors getting killed in the attack and rejected the Tiger claim of 35.

The latest violence came after the International Red Cross said Wednesday it had pulled its staff away from front-lines dividing government and rebel forces amid an escalation in the fighting across the island nation.