As the island prepared to celebrate its national day, police discovered a powerful bomb in the capital Colombo, prompting the arrest of more than 200 people in a security sweep.
Sri Lanka annually marks its 1948 independence from Britain with a day of festivities.
But the end of 133 years of British rule also sparked the eruption of ethnic tension between majority Sinhalese and minority Tamils on the island.
The Tamil Tiger rebels were spawned in 1972 and a resulting separatist conflict has left more than 60,000 people dead.
Security was intensified in Colombo to counter possible attacks by the Liberation Tigers of Tamil Eelam (LTTE) who marred independence day in 1998 with two suicide bombings that killed more than 20 people.
The crackdown came as President Mahinda Rajapakse invited the rebels to return to the negotiating table, but insisted that the separatists must lay down their weapons -- a demand the rebels consistently reject.
"They must begin surrendering weapons a