Anti-terrorist officers were continuing their search of a cargo ship intercepted in the Channel.

Security sources said they were acting on intelligence the vessel was carrying "terrorist material".

It was intercepted at 8am yesterday in international waters off the Sussex coast, about 30 miles south of Beachy Head.

A Scotland Yard spokesman said: "A full security search of the ship has been completed and no noxious or dangerous substances have been found aboard the vessel.

"At this stage, it is not possible to say how long officers will remain aboard the ship."

TV footage of the interception of the MV Nisha showed Royal Navy frigate HMS Sutherland trailing the ship by a few hundred yards.

Four rigid-inflatable boats went after the merchant vessel, zipping across the waves until they pulled level on its starboard side.

The joint intelligence-led initiative involved anti-terrorist police, the Royal Navy and Customs and Excise.

The ship was taken to Sandown Bay, off the Isle of Wight, where it is being moored until searches have been completed.

The spokesman stressed there was no danger to people living in the area.

Scotland Yard said the ship's crew, thought to be Indian, had been interviewed and were "co-operating fully".

The MV Nisha is operated by the Great Eastern Shipping Company, based in Bombay, India.

It had recently stopped in Djibouti, next to Somalia, a country which has been linked with Osama bin Laden's al Qaida terror network.

The ship had sailed from Mauritius and, according to the company, was carrying a cargo of sugar to the Tate & Lyle refinery on the Thames at Silvertown in east London.

She was carrying 26,000 tonnes of raw sugar, owned by the Mauritius Sugar Syndicate, which had chartered the vessel, and was due to arrive at 4am on Saturday.

Sudhir Mulji, chairman of the British arm of the Great Eastern Shipping Company, confirmed the vessel had stopped over at Djibouti to drop off American grain as part of a food aid shipment.

Dr Magnus Ranstorp, deputy director of the Centre for the Study of Terrorism and Political Violence at St Andrews, Scotland, said al Quaida would perceive ports as a weak link in the UK's security operation after the tightening-up at airports.

He said: "It is prudent of the UK authorities to intercept the ship because of the vicinity to Somalia and because it is right before Christmas.

"Anything is conceivable - al Qaida has shown that."