Kim Howells made the comments at the end of a three-day visit to the former British colony to try to salvage the peace process and reinforce Britain's support for a negotiated settlement in the conflict.
"We'll be delighted to become more involved in facilitating peace in Sri Lanka," said Howells who was due to leave later Thursday.
"The president (Sri Lankan President Mahinda Rajapaksa) told us we can talk to the LTTE so long as it is part of peace building."
"We have no objections to doing it. It is important for us as well, since Britain only talks to terrorist groups if they are part of the peace process.
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Howells met with Rajapaksa, the foreign minister and other senior government officials earlier Thursday.
The Liberation Tigers of Tamil Ealam (LTTE) has been fighting a lengthy battle with Sri Lankan government forces for an independent homeland for the Tamil minority on this Sinhalese-majority island.
More than 60,000 people have been killed in the conflict.
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