The squelch circuit described here is based on one of Ron's suggestions,  with the momentary switch function added by my son Chris (an Electrical Engineering student at UNSW in Sydney). It works well with my hydrophone, and although a PCB design would make construction easier and neater, the circuit is quite straight forward to build on a piece of project board, and the components aren’t very expensive. So if you’ve a need for a stand-alone squelch circuit (not necessarily just for hydrophones) – be our collective guest. If anyone out there produces  a PCB layout I’d sure appreciate a copy of the artwork, and any suggestions for improvement or modification are welcome. My own very limited experiences with PCB layout programs are mentioned here

The photo shows my as-built experimental unit - the circuit below incorporates a few refinements added later.

Function Overview
This device is literally a “black box”, connected by plugs and cables between the output of the hydrophone amplifier and the speaker (or another amplifier stage). It  monitors and displays the arriving signal and only connects it through to the speakers or next amplifier stage when the signal exceeds a set threshold. The presently set signal threshold level can be viewed on the bar graph by depressing the momentary switch (round black button in the photo) and adjusted by simultaneously rotating the Level Select knob (left hand silver knob). If the device is turned off the signal is passed directly to the output socket, so no power is drawn if one wishes to listen to the hydrophone without the squelch working.

Circuit description
The whole unit is intended to be powered from a well charged 12Volt battery (nominal 12.8V). The current passes through an on/off switch (which also switches the signal into the unit) and fuse to a 1 Amp 12 Volt regulating chip which powers the rest of the circuit except for the LED bar, which is powered via the 5 Volt regulating chip. (This LED bar could also be just a line of ten independently mounted LEDs) The signal enters via a 3.5mm mono plug and socket, and a pair of 470uF capacitors filter out any DC component so that just the signal reaches the LM3915 chip.
This chip is purpose designed to drive LEDs in response to changing signal levels. As configured in this circuit, it operates as a bar graph , responding to the varying input signal (it also has a moving dot mode). The 8K and 1.2K resistors set the internal reference voltage that the chip uses when determining signal levels. The photo shows my as-built version, which included a variable resistor controlled by the black & silver knob, but these fixed values work ok with my hydrophone. Download the LM3915 datasheet   if you’d like to know more about the chip.
In Bar mode, the stronger the signal the more LEDs are lit, starting from LED 1 (at a signal level of -27dB with respect to the reference voltage) and progressing to LED10 (0 dB) in 3dB intervals. Five volts is continually applied to all the bar LEDs, and the chip turns each on when required by connecting the appropriate pin to ground via internal resistors.
The first rotary switch allows any one of the outputs to the LED bar to be selected as the threshold signal level used to trigger the 555 timer. If the momentary switch is pushed, the LM3915 is temporarily de-powered and the selected LED is connected to ground via a resistor. This turns on the selected LED, allowing the present selection to be seen and adjusted. Once the momentary switch is released, if the selected LED is turned on by the LM3915, the voltage at the switch output falls, triggering the 555 timer.
The timer output is used to power the coil of a small relay (coil resistance must be greater than 500 ohms). The relay connects the hydrophone signal to the output socket, and simultaneously disconnects it from the squelch circuit. [If one wanted to simultaneously view the signal levels and listen, this disconnect function could be bypassed, but this might drain away some of the signal] The relay remains in this condition for a time interval and then switches back to the muted mode, unless the signal remains at or above the set threshold. The period of time that the squelch remains open can be adjusted between approximately 10, 5, 3 and 1 seconds by rotating the On-Time knob (right hand silver knob). Increasing the size of the 10uF capacitor, and/or the 1M resistor, should extend the time interval proportionately.
A double pole relay might also be used, which would allow the squelch to turn on a recording device, or a further amplifier stage.