The project has been proposed for the islet of Iramuthiv, off the coast of Kalpitiya where 10 islets have been offered to investors by the country's tourism development authority.

About 60 acres of Iramuthivu islet, which is spread over 100 acres, will be used for the leisure project.

A Canada based firm is also in talks for a 300 million dollar project in another islet.

Sri Lanka has seen a steep rise in tourist arrivals after the end of a war, resulting in a tourism boom.

Officials have said that 185 project proposals worth 1.85 billion US dollars have been received by a 'one-stop' office for approval.