Sri Lanka on Tuesday declared a nationwide state of emergency after riots targeting Muslims left at least two people dead and homes ablaze in a hill station popular with tourists.

The government said it was imposing the extraordinary measures after police failed to curb violence in Kandy, a central district famed for its tea plantations and Buddhist relics.

Heavily-armed police commandos were deployed to restore order in Kandy after rioters defied an overnight curfew and went on the rampage.

“The government is taking all possible measures to protect the people, especially Muslims,” Prime Minister Ranil Wickremesinghe told parliament.

He said an inquiry had also been opened into security lapses by police that allowed mobs of Sinhalese rioters to burn mosques as well as homes and businesses belonging to Muslims.

The body of a 24-year-old Muslim man was pulled out of a burnt home on Tuesday. Police said two dozen people had been arrested in the wake of the riots.

The emergency measures, imposed for the first time since 2011, give authorities sweeping powers to arrest and detain suspects for long periods, and deploy forces where needed.

President Maithripala Sirisena said the measures would “redress the unsatisfactory security situation prevailing in certain parts of the country”.

“The police and armed forces have been suitably empowered to deal with criminal elements in the society and urgently restore normalcy,” he said.

City planning minister Rauff Hakeem described the riots as a “monumental security lapse” and recommended disciplinary action against those responsible for allowing the situation to deteriorate.

Sri Lanka's parliament on Tuesday issued an apology to its Muslim minority, which constitutes 10 per cent of the country's population of 21 million.

The violence in Kandy, a serene region of verdant hills frequented by tourists and pilgrims, has threatened to reignite communal tensions that have roiled Sri Lanka in recent weeks.

War-era measures

The emergency declaration was made after a special cabinet meeting with President Sirisena.

It is the first time in seven years Sri Lanka has resorted to such a measure.

The island nation was under a state of emergency for nearly three decades during the civil war, when thousands disappeared and civilians were subjected to rights abuses.

Amnesty International said it was important authorities took action to protect minorities from violence and hold those responsible to account.

“But a state of emergency must not become a pretext for further human rights abuses,” said Amnesty's South Asia director Biraj Patnaik.

Riots erupted on Monday after a man from the island's mainly Buddhist Sinhalese majority died at the hands of a Muslim mob last week.

Hakeem said the riots were concentrated in Kandy, but the government wanted to send a strong message following recent outbreaks of communal violence elsewhere in the country.

Mobs set fire to Muslim-owned businesses and attacked a mosque in the east of the country last week after a Muslim chef was accused of adding contraceptives to food sold to Sinhalese customers.

The government dismissed the allegation as baseless and ordered the arrest of those fomenting unrest in the area.

Last November riots in the south of the island left one man dead and homes and vehicles damaged.

In June 2014 riots between Buddhists and Muslims left four dead and many injured.

That bout of violence was instigated by a Buddhist extremist group whose leaders are on trial, accused of spurring religious conflict.