One of Somalia's most notorious pirates, who terrorised vast areas of the Indian Ocean, generating multi-million dollar ransoms from the ships he seized, has announced his retirement.

Mohamed Abdi Hassan, aka 'Big Mouth', says he is quitting after spending eight years as a pirate leader.

He says he no longer wants to be involved in gang activity.

"After being in piracy for eight years, I have decided to renounce and quit, and from today on I will not be involved in this gang activity," the pirate said.

After almost a decade in which he and his men ruled the high seas, Big Mouth did not give a reason for his change of heart.

But at a ceremony in the central Somali region of Adado he declared he intended to persuade other pirates to abandon their life of sea banditry.

"I have also been encouraging many of my colleagues to renounce piracy too, and they have done it," he said.

Last year, the United Nations described Big Mouth as "one of the most notorious and influential leaders" in Somalia's pirate-hub region.

He and his men were reportedly responsible for seizing, amongst others, a Saudi super tanker released for a ransom of several million dollars.

They were also part of the 2008 capture of the MV Faina, a Ukrainian transport ship carrying 33 refurbished Soviet-era battle tanks, which was released after a 134-day hijack for a reported $3 million.

Pirate attacks off Somalia have plummeted to a three-year low thanks to beefed up naval patrols and teams of armed security guards aboard ships in the Gulf of Aden and the Indian Ocean.

Big Mouth is also reported to have carried out a string of attacks against ships carrying World Food Program aid to his war-torn and impoverished nation.

Rehabilitation calls

An armed Somali pirate keeping vigil on the coastline in 2010 ( AFP: Mohamed Dahir )

Last year he was reportedly given a diplomatic passport by Somalia's then-president, Sheikh Sharif Sheikh Ahmed, according to the UN monitoring group's June 2012 report.

The sheik told the UN experts that the "diplomatic status was one of several inducements intended to obtain the dismantling of his pirate network", the report read.

Somalia has been ravaged by a relentless conflict since 1991, and a lack of effective central authority has allowed pirate gangs, extremist militia and other armed groups to control mini-fiefdoms.

However, the political situation in Somalia has improved in recent months, with the selection of a new government and the massive military advances made against Islamist forces by African Union and government soldiers.

Local officials welcomed Abdi Hassan's announcement.

"We are very happy that the young men are now renouncing piracy," said Mohamed Aden Ticey, head of the local authority in the Adado region.

"We call on the international community to help these young men rehabilitate so that they could be educated," he added.

While the pirates have lost ground, the International Maritime Bureau (IMB) still warn that Somalia's waters remain extremely high-risk.

Eight boats and 139 hostages are still held by Somali pirates, according to the IMB, while some pirates have turned to land-based kidnapping and banditry instead.

ABC/AFP