Navy top brass and government officials gathered in Bolshoi Kamen, a shipyard where the submarine was assembled and sailed from, some 100 kilometres (60 miles) east of Russia's main Pacific naval base of Vladivostok.

"The preliminary official version is the irregular functioning of the fire extinguishing system," Sergei Lelyukhin, a local official, told AFP after the meeting led by the head of the Russian navy, Admiral Vladimir Vysotsky.

"The navy will take part in the investigation of the reasons of this accident and will do everything to help the families of the bereaved," RIA Novosti news agency quoted Vysotsky as saying at the meeting.

Military investigators have also opened a criminal negligence inquiry.

The accident happened Saturday off Russian shores in the Sea of Japan, where the Akula-class submarine was being tested before it was to be leased to the Indian navy under a contract reportedly worth hundreds of millions of dollars.

In as-yet unexplained circumstances, toxic freon gas was automatically pumped into the front section of the submarine after a fire alarm was triggered. Personnel in that section were starved of oxygen, officials said.

"There are 21 people currently being treated in hospital. The rest of the crew are being examined," Alexander Kostenko, deputy governor of Primorsky Krai region in the Russian Far East, said on Channel One television.

The accident carries echoes of the sinking of the submarine Kursk in 2000 in which 118 sailors died, and President Dmitry Medvedev's handling of the crisis will therefore be closely watched as a test of his leadership, experts said.

Then president Vladimir Putin was widely criticised for the Kursk disaster, particularly for failing to interrupt a holiday to deal with the crisis and for his administration's refusal of foreign assistance at a critical moment.

Medvedev's press service was quick to put out a statement on Sunday saying the president was being briefed about the situation on a regular basis and had ordered that all assistance be provided to the families of those who died.

Relatives are to receive 3,700 dollars (2,883 euros) each, officials said.

Meanwhile a church service was held in Vladivostok and a day of mourning will be marked in the region on Tuesday. Three of the victims are expected to be buried in Bolshoi Kamen on Wednesday, Russian news agencies reported.

"This is so sad. And it happens all the time," said Anton Peregin, an 18-year-old student from Vladivostok, who told AFP he once dreamed of joining the Russian navy but had been put off by the high accident rate.

"It's very hard to bear... It's a real shock," Pavel Laptsov, a local inhabitant, said in comments broadcast on Channel One, speaking against the backdrop of the Bolshoi Kamen shipyards where the submarine returned on Sunday.

Russian newspapers said the submarine was only intended for a crew of 73 and that there were 208 people on board during the tests. The Kommersant daily quoted navy personnel saying there may not have been enough oxygen masks.

Kommersant also quoted a shipbuilding industry source commenting on the unsure status of the leasing contract to India, which the newspaper said was worth at least 650 million dollars.

"The submarine won't have significant damage after the accident. India's reaction to the incident is another thing, especially since its completion has been delayed at least twice," the source was quoted as saying.

The shipyard at Bolshoi Kamen was off-limits to journalists but the popular newspaper Komsomolskaya Pravda reported that local inhabitants were disgruntled about confusing initial reports and a lack of information about the tragedy.

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