A fire-stricken oil tanker was pushed away from Sri Lanka's coast and into deeper waters on Saturday, rescuers said, after successfully containing the blaze during a 36-hour operation.

The Panamanian-registered New Diamond carrying 270,000 tonnes of crude had drifted dangerously close to the eastern shores of Sri Lanka since issuing a distress message on Thursday morning.

The Indian Coast Guard and the Sri Lankan navy said the 330-metre (1,000-foot) vessel was towed overnight to deeper waters some 60 kilometres (37 miles) away from the coast.

"There is no oil slick reported," the Indian Coast Guard said after a joint effort by the two countries to contain the blaze. 

Sri Lanka's navy said rescuers were still spraying foam on the vessel but that the blaze had been brought under control.

There was no immediate danger of the tanker breaking up despite a two-metre (6.6 feet) crack in the hull 10 metres above the waterline, it said.

The fire was triggered by an engine room explosion that killed a Filipino crewman on Thursday morning as the vessel was passing Sri Lanka on its way to the Indian port of Paradip.

It issued a distress signal 60 kilometres from Sri Lanka's eastern coastal town of Sangamankanda Point.

Three tugboats -- two Indian and one chartered by the owners -- were brought into action on Friday night to push the vessel back into deeper waters amid fears of an environmental disaster should the oil leak.

A total of 16 vessels, including specialised firefighting tugs and four aircraft, were deployed to bring the blaze under control by Friday night.

Sri Lanka's Marine Environment Protection Agency said legal action could be taken against the owners, Liberian-registered Porto Emporios Shipping Inc "should the worst happen and the ship breaks up".

Sri Lankan officials said they were considering a ship-to-ship transfer of the crude before salvaging the tanker.

The vessel is larger than the Japanese bulk carrier MV Wakashio, which crashed into a reef in Mauritius in July leaking more than 1,000 tonnes of oil into the island nation's pristine waters.

The Maldives, which neighbours Sri Lanka, has raised concerns that any oil spill from the New Diamond could cause serious environmental damage in the atoll of more than 1,000 coral islands that is heavily dependent on tourism and fishing.