It said in a statement that an entirely new city will be built in the town of Vavuniya under the Vavuniya Urban Development Plan, which is to be implemented by the Urban Development Authority (UDA) responsible for city planning.
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Vavuniya was the gateway to the north, and for years was the last main town under government control during the war with the Tigers which ended with their defeat by security forces in May.
The war transformed Vavuniya into a garrison town with a large military presence and a big logistics support base for the campaign against the Tigers.
The Vavuniya Urban Development Plan was revealed to the public at a ceremony Friday at Vavuniya, the ministry statement said.
"A sum of 15,000 million rupees is to be spent on the first stage of this plan, which is for an entire city complete with all necessary facilities," it said.
While the town of Mankulam further is to be developed as an administrative centre for the northern region, Vavuniya will remain a gateway to a