"The army fired in self-defence," he said. "These people were throwing stones and were trying to escape."
Local police said at least three people suffered gunshot injuries.
Around 250,000 people displaced by fighting between troops and Tamil Tiger separatists have been held in the state-run camps since the rebels were finally defeated in May.
The Sri Lankan government has been widely criticised for holding the inmates indefinitely, but it insists it needs more time to weed out Tiger fighters mingling with the displaced civilians.