The separatists, in an email statement on Thursday, also threatened reprisals against the military and oil company Royal Dutch Shell.

The government's attack on fighters from the Movement for the Emancipation of the Niger Delta (Mend) on Wednesday was the largest since last month, when a military bombardment of a separatist stronghold prompted a string of devastating attacks on oil installations and the kidnapping of nine foreign oil workers.

A Nigerian military spokesman confirmed that soldiers fought a fierce gun battle with a separatist group holding three Western oil workers hostage in the Niger Delta.

"There was an exchange of fire between government troops and the militants yesterday. I have no details yet on casualities," Major Said Hammed said on Thursday.

Firefight

Referring to Wednesday's clash, the separatists' email said "our patrols on the Escravos River were attacked in the vicinity of Okerenkoko by four patrol boats belonging to the Nigerian Army". It said that the battle lasted 45 minutes.

Okerenkoko is an ethnic Ijaw town 30km west of the port of Warri and is thought to be where Mend is holding the hostages.

Nigerian separatists are holding
three Westerners hostage

The Mend statement said: "Seven soldiers were confirmed killed at the scene of the attack and an unspecified number reported dead upon arrival at the Shell terminal from where this attack was launched."

The armed separatists have provided accurate information on previous incidents.

The fighters are still holding three foreign hostages - two Americans and one Briton - from last month's raids, when their attacks on pipelines and a loading platform forced Shell to cut 455,000 barrels a day output.

On Wednesday, the separatist group named an Ijaw activist as mediator for talks with the government, raising hopes of a  resolution.

No casualties

The fighters said 32 troops initially attacked in four boats, but were reinforced by three more boats containing 24 more soldiers. They said they suffered no casualties.

The fighters also said they had received reports of army patrols firing indiscriminately into Ijaw communities near the village of Odidi.

Producing 2.6m bpd, Nigeria is
Africa's biggest exporter

"In the light of this, we are considering what further actions to take against the military and Shell installations in Forcados and Odidi," the separatists said.

Shell has already evacuated staff from the Forcados region, and shut all its production from the western side of the delta.

According to a Nigerian skipper who rents small boats to oil firms in the area, witnesses saw six dead soldiers brought to Shell's Forcados terminal after fighters attacked a patrol boat escorting a tug.

Nigeria is Africa's biggest oil exporter, producing 2.6 million  barrels per day, but output has fallen by around 20% since the start of the latest round of violence.

Many among the Niger Delta's 14 million-strong Ijaw tribe say their region's oil wealth has been stolen by corrupt Nigerian officials and foreign oil majors, and several armed groups operate on the delta creeks.