Sri Lanka had the lowest holiday costs among 40 destinations surveyed at 27.
95 British pounds down 31 percent from a year earlier, with Spain's Costa de Sol area coming second with 37.72 pounds.
But Sri Lanka was further away indicating higher ticket prices than Spain and an April hike of the Air Passenger Duty initiated by a global warming scare will also push up costs for all long haul destinations.
Sri Lanka also has a new visa fee for Britons.
"UK visitors will have to factor in a new $20 per person visa charge but this is a far cry from the $50 tag first announced and the original plan to charge children under 12 has also been dropped," the report said.
"This means that families considering an Indian Ocean trip should find Sri Lanka cheaper than Mauritius or the Maldives.
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The annual Worldwide Holiday Costs Barometer 2012 compiled by the Post Office's Holiday Money division measures eight items including the price of coffee and beer in a bar and supermarket pric