The Kuchaveli base, near the eastern coastal town of Trincomalee, came under sustained fire from the Liberation Tigers of Tamil Eelam (LTTE).
Christian Aid supports a number of projects in the area and staff report hearing constant machine-gun fire in the town.
Civilians have been forced to flee into the jungle for safety. If many people are displaced it will put a huge strain on aid agencies' ability to feed and support refugees.
Christian Aid staff have now been moved to a safe area and all non-essential trips have been halted.
Earlier in the week, the office of a Christian Aid partner TDYDA was hit by gunfire and has been closed.
The area was severely hit by the tsunami in December and many people lost their lives. Many others were made homeless and thousands of people are still living in tents and temporary accommodation.
The fighting puts the post-tsunami reconstruction effort at risk.
Nick Guttmann, head of Christian Aid's humanitarian division, said: 'This is another humanitarian crisis. People who have already lost their homes in the tsunami have now again been forced from their temporary shelters. This is a disaster in the making.'
The attack on the navy camp comes after days of tension and increasing violence. Earlier in the week three members of the LTTE - also known as the Tamil Tigers - were assassinated.
It is widely believed, particularly among LTTE supporters, that the killings were the work of the Karuna faction - a militant group based in the east, which split from the LTTE in April 2004.
Many Tamils believe that the Karuna faction carried out the assassinations with the tacit support of the government.
The assault on the naval camp is the most serious incident, but follows attacks on Sri Lankan troops in the past few days.
There is unconfirmed evidence of a build up of troops by both the LTTE and government forces. It is also believed that the Tamil Tigers are recruiting young men living in tsunami refugee camps.
The LTTE argues that Tamils constitute a distinct nation and want a separate homeland in the north and east of the country.
The ceasefire has lasted more than three years. In the immediate aftermath of the tsunami, Tamil groups and government soldiers worked together, rescuing victims and feeding and tending the affected.
But the goodwill between the two sides soon soured as political assassinations continued and tensions developed over accusations that the government was not channelling post-tsunami aid through the local LTTE administration.
If conflict erupts, it will make rehabilitation work and house-rebuilding - vital in the wake of the tsunami - extremely difficult and dangerous.
Mr Guttmann said: 'This is extremely serious. All sides need to show restraint. There is too much at stake.
'If violence spreads it will not only jeopardise essential rebuilding work, it will further increase the chronic poverty that already exists in many parts of post-conflict Sri Lanka.