The ethnic minority Tamils are held against their will.
More than half were released in recent months amid pressure from rights groups and foreign governments.
Rajiva Wijesinha, of the disaster management and human rights ministry, said that there were security concerns that had to be addressed before the refugees could be resettled.
"We made it very clear in May that we would resettle people as quickly as possible but we did have very serious security concerns"
Rajiva Wijesinha, disaster management ministry
"This [releasing of refugees] is entirely in accordance with government policy," Wajesinha told Al Jazeera on Saturday.
"We made it very clear in May that we would resettle people as quickly as possible but we did have very serious security concerns."
Wajesinha also said there was need to restore infrastructure before the refugees went back to their homes.
Saturday's announcement came two days after John Holmes, the UN humanitarian chief, pressed Sri Lanka to allow the war-displaced to leave.
Sri Lanka pledged in September to the UN that all civilians would be sent home by the end of January.
Rights groups say the detention is an illegal form of collective punishment for the ethnic group.
Access to the camps was heavily restricted.
The government has maintained that Tamils must be screened for LTTE ties and detainees' villages demined before the camps were closed.
Rajapaksa said the military was given the green light to open camps as no security threats remained.
Detainees can settle in areas cleared of mines, he said.
Government troops defeated the LTTE in May, ending their 25-year fight for an independent homeland for the country's minority Tamils.
An estimated 80,000 to 100,000 people were killed in the violence.