A brawl over a traffic accident on Gintota, about 110km (68 miles) south of the capital Colombo, on Thursday descended into clashes between mobs from the majority Sinhalese and
Muslim minorities.
The army and navy were deployed to reinforce local police as the situation spiralled over the weekend with at least five people hospitalised and close to 90 buildings damaged in the rioting.
The town remained tense and under lockdown throughout Saturday evening, but at dawn a curfew imposed on previous days was lifted.
“We have called for a complete report about damages and all the victims will be compensated by the state,” Home Minister Vajira Abeywardena told reporters.
Security forces and police would remain in place until law and order had been restored, he added.
Muslims account for about 10% of Sri Lanka’s 21mn people, the second-largest minority group after Tamils.
Sinhalese - a largely-Buddhist ethnic group - make up more than 70% of the population.
Police said 19 people have been arrested in connection with the weekend riots and the authorities were looking for more suspects.
In June 2014, there were religious riots between the majority Buddhists and minority Muslim leaving four dead and many injured.
That violence was instigated by a Buddhist extremist group whose leaders are on trial accused of spurring religious
conflict.