Although the LTTE's military force had been destroyed in the island, its global network was still active, with considerable funds and influence, he told a public forum on future national security challenges.
"That's why we must maintain a sizeable defence force as well as defence spending, although there are some people who question why the defence establishment is so large and the amount of money allocated for defence," Rajapaksa said.
"The re-grouping and re-organisation of Tiger separatists within Sri Lanka is still a threat to national security.
"It is only logical that the government take every precaution to guard against it by maintaining a sizeable military."
The military was setting up camps in strategic locations around the island, especially jungle areas that were former Tiger bases, to prevent the regrouping of the Tigers, he said.The overseas Tigers were still trying to revive the struggle for a separate state for minority Tamils in Sri Lanka's north and east.
"There is a possibility, even though it's remote, that terrorists will re-organise within Sri Lanka because of the LTTE's international campaign," Rajapaksa said.
"It is a possibility, however remote, we must not ignore as it could pave the way for a separatist terrorist campaign again."
Rajapaksa said Tamil separatists who escaped at the end of the war and are still at large and not undergone rehabilitation and may still support the separatist cause.
The island had already strengthened its intelligence services to guard against the re-emergence of the Tiger separatists, he said.
"We have evidence that LTTE cadres who left Sri Lanka before the war ended are trying to contact people in Sri Lanka and encourage them to regroup. Our intelligence services have found that they are trying to contact people in Sri Lanka to revive the LTTE effort."
At the time of their defeat the LTTE's global network had a lot of funds, Rajapaksa said.
Although control of the LTTE assets was now dispersed among different factions, they still generate funds through businesses and illegal activities like human smuggling and were committed to the same cause.