It had promised to release and relocate 80 per cent of them by the end of the year, but nearly five months after the war ended, around 255,000 remain held in the camps.
With monsoon season approaching, New York-based Human Rights Watch (HRW) has called on the Sri Lankan government to immediately release the refugees, warning that already poor conditions in the camps were deteriorating, and heavy rains could flood the overcrowded and low-lying areas.
HRW's Brad Adams says a major humanitarian disaster is waiting to happen at the camps
"With all these people penned up unnecessarily in terrible conditions, the situation in these camps is getting tense and ugly," Brad Adams, HRW's Asia director, said at the weekend.
"If they aren't out of there before the monsoons hit, their lives and health will be in serious danger."
Rains in mid-August caused serious flooding, destroying tents and other shelter, making cooking impossible for many, and causing roads to collapse, preventing the delivery of crucial aid such as drinking water.
Water also flooded latrine pits, causing raw sewage to flow among the tents. Since then, conditions have further deteriorated, HRW said.
Speaking to Al Jazeera, Rajiva Wijesinha, the secretary of the Sri Lanka's ministry of disaster management and human rights, admitted there had been problems with toilets and drainage and floods in August.
But he blamed the UN for the situation, accusing its agencies of not fulfilling promises to upgrade or repair facilities and doing "very shoddy" work in the camps.
Wijesinha said that there was a need for what he called "decongestion" of the camps, adding: "We have asked for assistance on sending people away to some of the districts they had originally come from, and we believe this is going on reasonably well … perhaps much better than Human Rights Watch understands."
He repeated the government's position that it is trying to release the detained Tamils, but said the process had been slow because they need to be screened for rebel ties, and their villages in the former battle zone remain heavily mined.
Responding to Wijesinha's assertions, Anna Neistat, a senior researcher with HRW, told Al Jazeera she did not think there was "any reason to believe that the camps are ready" to cope with the onset of the monsoon.
"The Sri Lankan government has been saying so many different things over the last month, including, for example, that people will be released, people will be resettled, that the conditions are up to international standards, none of that has so far proven to be true," she said.
HRW has called on donors such as Japan, the US, and the EU to step up pressure on Sri Lanka over the issue, echoing a call last week by Amnesty International, which urged the government to clear the camps.
Mike Foster, Britain's international development minister, expressed disappointment at the speed of the release when he visited the camps last week.
According to the UN, by the end of September the government continued to hold 255,551 displaced persons in the military-run camps and hospitals, the majority of them in a large complex of camps called Menik Farm.
President Mahinda Rajapaksa's government is enjoying strong support at home in the wake of the military victory over the Tamil Tigers, winning the latest in a string of provincial elections over the weekend.
|Colombo claims 22,000 refugees have been resettled but the UN says 15,000 [EPA]
But the formerly LTTE-held Northern Province has yet to vote and rights groups say the screening of refugees is an excuse for keeping thousands of Tamils detained.
Sri Lanka says more than 22,000 people have been resettled from the camps, and it hopes to send everyone home by the end of January.
According to the UN however, the government had released fewer than 15,000 as of September 28.
HRW said on several occasions the government had claimed that it had allowed thousands detained in Menik Farm to return home, only to transfer them to other camps or so-called temporary "way stations".
"While the government has the right to screen the displaced persons for security reasons, the process has turned into a ruse to hold as many Tamils for as long as possible in the camps," Asia Director Brad Adams said.
"The government's untruthful statements and promises should not fool anybody anymore."