Fonseka is yet to formally announce his candidacy, but the United National Party (UNP) and 14 other opposition parties have said that they would back him as its candidate. Nominations have to be received by December 17.
Fonseka is expected to announce that he will run for president this weekend.
Some analysts have said that Fonseka could split Rajapaksa's support base and unify opposition groups.
"General Fonseka has caused a lot of apprehension in the government and has become a serious challenger," Jehan Perera, an analyst with the non-partisan National Peace Council, said.
Rajapaksa has completed only four years of his six-year term, which ends on November 2011.
The government has attempted to dampen down Fonseka's perceived role in the victory over the LTTE.
The LTTE had been fighting for a separate ethnic-minority Tamil homeland in the northeast. The conflict left more than 80,000 people dead.