The Sri Lankan prime minister, Ranil Wickremesinghe attempted to blame the "extremists who had come outside" for the anti-Muslim violence in Kandy.
Several Muslim shops, mosques and homes were attacked this week by Sinhala mobs roaming through villages in the region.
"Buddhist and the Islamic clergy in Digana and Theldeniya were engaged in a dialogue to resolve the issue peacefully but a group of extremists who had come from outside were the culprits who were engaged in violence," Mr Wickremesinghe told parliament on Monday.
"There had been some shortcomings in the maintenance of law and order during the incidents in Theldeniya and underscored the fact that action would be taken against the law enforcement officers who had failed to carry out their duty."
Mr Wickremesinghe said compensation would be granted to those who had been affected by the violence.
Yesterday a state of emergency was declared in the country. However, violence against Muslim shops and buildings continues to be reported.