The alleged weapons find came as the government carried out a third day of airstrikes on Tamil Tigers positions in the northern Jaffna peninsula while six soldiers also died in a landmine blast.
In the last month the Jaffna peninsula has seen some of the fiercest fighting in years after the Tigers, a heavily armed separatist group, launched an offensive to recapture the government-held region, dear to the island country's ethnic minority Tamils.
As fighting for Jaffna continued on Sunday, a Red Cross ferry evacuated 150 foreigners from the port town which is now surrounded on all sides by Tamil Tigers.
More than 40,000 local people are now estimated to have fled their homes in the Jaffna peninsula. Around 650 people have died there in 11 days of fierce fighting this month.
Weapons and explosives
In Colombo, the Sri Lankan capital, police said on Sunday that they had foiled a major attack on the city by seizing a Tigers weapons cache.
Officers from the police's elite special task force, acting on a tip, had raided a house in Pamunugama, a coastal town near the country's international airport on Saturday morning, and seized weapons and explosives, police said.
A police officer said that the haul included eight hand grenades, two roadside bombs, an assault rifle, ammunition and detonators.
He also said that 17 suspects were detained for questioning.
The suspects are all from Kokkadicholai, a Tiger-controlled village in the country's northeast.
The Tigers have been fighting the Sri Lankan government for more than 20 years.
The island nation's 3.2 million ethnic Tamils say they have suffered decades of discrimination from the country's majority Sinhalese population.
The Hindu Tamils were brought to Sri Lanka by the island's British colonial government in the nineteenth century.
The Sinhalese are mainly Buddhist and are the country's native inhabitants.
A 2002 ceasefire brought a halt to large-scale fighting, but the fighting in Jaffna and eastern Trincomalee have brought the truce's viability into question.
Some Tamil Tiger leaders have said that the ceasefire is over.
The United Nations refugee agency estimates that over 200,000 people have fled their homes in the two regions.