The new regulations declared by President Mahinda Rajapakse did not directly name the Tamil Tigers and left the door open for reviving negotiations, Foreign Minister Mangala Samaraweera said.
"This is an incentive for the LTTE (Liberation Tigers of Tamil Eelam) to come to talks," Samaraweera told reporters at the tightly-guarded parliament building.
He said the government asked peacebroker Norway to resume contacts with the guerrillas and nudge them back to the table.
Oslo's envoy Jon Hanssen-Bauer, who was on Sunday asked to suspend contacts with Tigers pending a review of Colombo's ties with the rebels, was told Wednesday to meet with the guerrillas at the earliest, Samaraweera said.
The government defined "terrorism" as an "unlawful conduct" which endangered national security, threatened violence against any individual or any sovereign state.
Offenders could be jailed for up to 20 years.
Having any dealings with offenders was also an offence, but local and international chariti