The Karuna militia, a splinter group that broke away from mainstream Tamil Tigers fighters (LTTE) in 2004, is co-operating with the Sri Lankan military in their common fight against the LTTE.
"The Karuna group is abducting children in broad daylight in areas firmly under government control," said Brad Adams, Asia director at Human Rights Watch.
"The government is fully aware of the abductions but allows them to happen because it's eager for an ally against the Tamil Tigers."
Based on research in Sri Lanka, including areas where the Karuna group operates, the report, which comprises case studies, maps and photographs, features evidence from two dozen family members of boys and young men abducted by the Karuna group.
|"The government is fully aware of the abductions but allows them to happen because it's eager for an ally against the Tamil Tigers"|
Brad Adams, Human Rights Watch
They describe armed Karuna members forcibly taking their brothers, nephews and sons from their homes, workplaces, temples, playgrounds, public roads, and even a wedding.
The United Nations Children's Fund (UNICEF) has documented more than 200 cases of child recruitment by the Karuna group in Sri Lanka's eastern districts, where the group is active.
But the real number is believed to be much higher due to under-reporting.
Human Rights Watch said that the Sri Lankan police are also complicit in their unwillingness to seriously investigate complaints filed by the parents of abducted boys and young men.
The government has called the report "inaccurate".
Keheliya Rambukwella, the chief government spokesman, said: "This report is based on various inaccurate information that has been floating in the country in the past months.
"What we want from Human Rights Watch is credible evidence, not just a statement. Only then we can take action if needed," he said.