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In this work, the authors first solve the output feedback stabilization problem of underactuated surface vessels. The ships under consideration are not actuated in the sway direction. In order to overcome the difficulties of measuring the linear and angular velocities of an underactuated surface vessel, a high-gain observer is proposed to estimate the linear and angular velocities. In terms of separation principle, coordinate changes and a high-gain observer are combined to design global uniform asymptotic time-varying smooth output feedback stabilization control law. Simulation results demonstrate the effectiveness of the suggested approach.