The mighty Boxing Day tsunami has revealed what archaeologists believe to be the lost ruins of an ancient city off the coast of Tamil Nadu in southern India.

The 30-metre waves, which reshaped the Bay of Bengal and swept more than 16,000 Indians to their death, shifted thousands of tonnes of sand to unearth a pair of elaborately carved stone lions and a stallion near the famous 7th century Dravidian temple on the coast at Mahabalipuram, south of Madras.

Indian archaeologists believe these granite beasts once guarded a small port city that may have been submerged since the last Ice Age. The 2-metre high lion statues, each hewn from a single piece of granite, appear breathtakingly lifelike. One great stone cat sits up alert while the other is poised to pounce. Two man-made foundation walls also remain visible beneath the murky waters, now measurably shallower.

The tsunami also de-silted a large bas-relief stone panel that had been buried in sand for centuries, close to the shore temple. The half-completed sculpted elephant was effectively scoured clean by the great waves and now attracts mobs of visitors who touch its eroded trunk as a good luck talisman.

Scientists from the Archaeological Survey of India (ASI) are descending on the World Heritage temple complex of Mahabalipuram to examine these exquisite relics and to launch an underwater survey.

One of the local fishermen who survived the Boxing Day disaster was catapulted aloft by the tsunami and reportedly clung for hours to the great arch of the shore temple. He spotted the undersea structures from this perch and told district authorities seven weeks ago.

Since April 2002, marine archaeologists have been working in tandem with divers from Delhi and a team from the Scientific Exploration Society based in Dorset, England, to search for any remnants of this ancient port.

"The sea has thrown up evidence of the grandeur of the Pallava dynasty," the head ASI archaeologist, T. Sathiamoorthy, told reporters last week. "We're all very excited about these finds."

Set among the casuarina trees and palms at Mahabalipuram, these sprawling temples are among the most venerable in India. Two centuries ago, sailors referred to Mahabalipuram as the "Seven Pagodas".

According to Shobita Puja, an Indian historian: "Six other pagodas and, indeed, an entire city were said to have been consumed by the waves, leaving the treasures at the bottom of the sea."

Legend has it that this city was so magnificent that jealous gods unleashed a flood that swallowed it up in a single day.

A British travelogue, penned by J. Goldingham, who visited the South Indian coastal town in 1798, first mentioned these sailors' tales in writing. But even in Ptolemy's time, the place was considered an ancient port. One of the Dorset divers, Graham Hancock, was exultant after initial investigations were completed three years ago.

He told the BBC at the time: "I have argued for many years that the world's flood myths deserve to be taken seriously, a view that most Western academics reject. But here in Mahabalipuram, we have proved the myths right and the academics wrong."