An Indian navy warship has sunk a Somali pirate "mother ship" in the Gulf of Aden, the world's most treacherous waterway, after the renegades threatened to attack the frigate.

The clash happened as pirates claimed to begin negotiations over a ransom for the Saudi super-tanker that was seized nearby on Saturday with two Britons aboard. The Sirius Star, which is carrying at least $100 million worth of oil, is the biggest ship ever to be hijacked.

INS Tabar, an Indian frigate dispatched last month to the area to protect the country's merchant fleet, sighted the pirate vessel late on Tuesday. Indian officers said they spotted pirates moving on the deck with rocket propelled grenade launchers and automatic weapons.

"On repeated calls, the vessel's threatening response was that she would blow up the naval warship," the Indian Navy said in a statement.

"INS Tabar retaliated in self defence and opened fire on the mother vessel.

"As a result of the firing by INS Tabar, fire broke out on the vessel and explosions were heard, possibly due to exploding ammunition that was stored on the vessel."

“From what we see in photographs the pirate vessel is completely destroyed,” a senior officer said. Two speedboats were seen fleeing the sinking ship.

Since the Sirius Star was captured at least three other ships – one Greek, one Thai and one from Hong Kong – have been seized by Somali pirates.

Today, Al-Jazeera, the Arabic television network, broadcast an audio tape that it said was one of the pirates making a ransom demand for the return of the Sirius Star.

"Negotiators are located on board the ship and on land. Once they have agreed on the ransom, it will be taken in cash to the oil tanker," said the man identified as Farah Abd Jameh. He did not indicate the amount to be paid.

"We assure the safety of the ship that carries the ransom. We will mechanically count the money and we have machines that can detect fake money," he said.

Vela International, the owners of the ship, declined to comment on the report. Seized in the Indian Ocean about 500 miles (800 kilometres) off the coast of Kenya, the Sirius Star is now thought to be anchored at the Somali pirate lair of Harardhere.

The super-tanker has a 25-strong crew -- 19 from the Philippines, two from Britain, two from Poland, one Croatian and one Saudi.

The Gulf of Aden controls access to the Suez Canal, which allows ships to go between Europe to Asia without having to take the longer and more expensive route around the southern tip of Africa. It is a crucially important route for oil tankers. The UN has said that piracy in the area is now out of control.

The German navy said yesterday that one of its frigates had foiled attacks on two ships in the Gulf of Aden, using a helicopter to chase off pirates who fled in their speedboats.

For the pirates who carry out the attacks, the allure is that of riches, the likes of which would be impossible to attain in their poverty-wracked homeland.

In September, Somali hijackers released a Japanese ship and its 21-member crew after a $2 million ransom was paid three months after its capture.

A week ago, pirates caught redhanded after trying to hijack a cargo ship off Somalia made the mistake of firing on two Royal Navy assault craft packed with commandos armed with machineguns and SA80 rifles.

Two Somali pirates in a Yemeni-registered fishing dhow were killed. A third pirate, believed to be a Yemeni, suffered injuries and subsequently died.

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