His two police guards were also killed, the information ministry said.
Sooriyaarachchi and former ports minister Mangala Samaraweera were sacked by Rajapakse in February 2007. The duo then formed their own faction of the ruling Sri Lanka Freedom Party styling themselves SLFP (M) or 'peoples' section.
They also aligned themselves with the main opposition UNP forging a loose alliance.
Sooriyaarachchi had also mounted legal challenges to equity sales of state-owned firms saying it was against the policy of non-privatization promised in the election manifesto of the president.
He had also challenged a proposed sale of a part of Sri Lanka Telecom to Malaysia's UT group. The case is currently before the island's supreme court.
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