Increased surveillance of Tamil Nadu's southeastern coast have resulted in the arrest of two suspected terrorists and the seizure early Friday of a boat laden with contraband ammunition bound for northern Sri Lanka, police said.

The consignment recovered off the coast of Rameshwaram, about 600 km from state capital Chennai, consisted of explosives, batteries and camouflage attire.

'The operation began Thursday evening and lasted till well past midnight. To our knowledge, the arrests were made and ammunition seized, a very common occurrence here. However, we did not seek further details,' said a coast guard official.

Officials said this was a consequence of the central government's beefing up of coastal security.

'The centre has created the Coastal Security Scheme (CSS) to stop intrusions and other nefarious activities. Seven marine police stations, built at a cost of Rs.30.92 million in the first phase out of a total outlay of Rs.440.08 million meant for Tamil Nadu, will keep watch over our 12 nautical mile territorial waters,' Additional Director General of Police (CSS) Jagan Sheshadhri told IANS.

CSS is supplementing and complementing the activities of the coast guard and navy, Sheshadhri added.

Police sources said Friday's incident showed that terrorists were active despite the state government's stringent measures, which had resulted in the filing of over 90 cases against terrorists since the DMK came to power 21 months ago.

Opposition parties have accused the government of being soft on the LTTE (Liberation Tigers of Tamil Eelam) and its supporters in the state. However, the government has denied the charge.