Al-Qaeda killed 16 soldiers in an attack on an army base in south Yemen, medical and military sources said, in a further show of strength by Islamist militants despite a US campaign of drone strikes to neutralise them.

Militants tightened their hold on parts of Yemen during an uprising that ousted veteran president Ali Abdullah Saleh in February, raising concern for the security of top oil exporter Saudi Arabia next door and nearby shipping lanes.

Violence has intensified in the past few weeks with Washington stepping up drone, or pilotless aircraft, operations and militants carrying out retaliatory attacks on state and military targets.

Two militants disguised in army uniforms drove an explosives-laden car into the military base in Shuqra, a town in the southern province of Abyan, and detonated them inside, a military official said.

Moments later, other militants assaulted the base from the sea and a fierce battle ensued.

At least 16 soldiers and eight militants were killed, according to medical and military sources.

An initial death toll that counted 13 militants as dead was revised down to eight after five of those killed were identified as uninvolved civilians.

"The two suicide bombers were wearing army uniforms, and even their car had a military numberplate, so they didn't raise any suspicion," a wounded Yemeni soldier told Reuters by telephone from hospital.

Yesterday, nine suspected al-Qaeda militants were killed in what a security source and residents said was a US drone strike on a farmhouse outside a town in south Yemen that was held by militants last year.

Yemen's wealthier Gulf neighbours and Washington are concerned that al Qaeda and other Islamist militants operating in Yemen could pose a threat to Saudi Arabia and to nearby shipping channels.

Since Yemen-based al-Qaeda in the Arabian Peninsula (AQAP) was formed by Saudi and Yemeni militants in 2007, the group has carried out suicide attacks on Western tourists and foreign officials, sent a bomber into Saudi Arabia in an attempt to assassinate a senior prince and tried to place explosive packages on aircraft bound for the United States.

Islamist insurgents captured two southern cities, Jaar and Zinjibar, between March and May 2011, taking advantage of a security vacuum during the anti-Saleh revolt.

After Saleh quit, the army managed to remove militants with the help of US missiles fired from air and sea.

But local residents say militants still hold sway in some districts while the army controls only entry points well outside.

Many Yemenis complain the US focus on militants is a violation of sovereignty that is driving many towards al-Qaeda and diverting attention from other pressing issues such as unemployment, corruption, water depletion and economic revival.