Pirates off Somalia's lawless coast have raked in up to $30million in ransoms this year alone, a London-based think-tank says, as negotiations continued between pirates and shipping officials over the release of a Ukrainian tanker laden with battle tanks and weapons.

A flotilla of US Navy warships has surrounded the MV Faina, which is anchored off the central Somali coast, to ensure that the pirates don't unload any of the weapons. The cargo ship and its 21-man crew were hijacked on September 25, and the ship's load of 33 Soviet-made T-72 tanks, ammunition and heavy weapons have sparked fears among Western governments that the arms could end up in the hands of terrorists.

The pirates have demanded a $20 million ransom and Somali officials have authorised foreign powers to use whatever force is necessary to free the ship.

The report issued yesterday by Roger Middleton for study group Chatham House said the millions being earned by pirates in ransom were already being used to pay for the war between the shaky Somali Government and Islamic insurgents, some of whom are on a US State Department list of terrorists.

''The international community must be aware of the danger that Somali pirates could become agents of international terrorist networks,'' Mr Middleton said, but admitted there was no explicit evidence yet showing that ransoms had bought weapons outside Somalia.

Piracy in 2008 has more than doubled from the previous year, with more than 60 attempted attacks or successful hijacks reported. Most pirate attacks occur in one of the world's busiest shipping lanes, the Gulf of Aden, north of Somalia. But recently, pirates have been targeting Indian Ocean waters off eastern Somalia.

In a separate report yesterday, a Danish intelligence company specialising in maritime security said there had been a dramatic increase in the number of seamen held by Somali pirates in September.

Risk Intelligence said pirates held 374 people captive after raids off the Horn of Africa last month. That compares with 292 hostages in all of 2007.