Tracking of manoeuvring targets is a problem of a great practical and theoretical interest. The real-world tracking applications meet a number of difficulties caused by the presence of different kinds of uncertainty due to the unknown or not precisely known system model and random processes’ statistics or because of their abrupt changes. These problems are especially complicated in the marine navigation practice, where the commonly used simple models of rectilinear or curvilinear target motions do not match to the highly non-linear dynamics of the manoeuvring ship motion. A solution of these problems is to derive more adequate descriptions of the real ship dynamics and to design adaptive estimation algorithms. In the paper a new ship model is derived after an analysis of the basic hydrodynamic models. This model is implemented in a new version of the Interacting Multiple Model (IMM) tracking algorithm - the most cost-effective multiple model algorithm for hybrid estimation. The proposed new IMM uses extended state vector and model to compensate the difference between the fixed control parameter of the currently used IMM model and its real value. The performed Monte Carlo simulations, show excellent model fit and estimation performance.