The European Commission has decided to allocate seven million euros to help around 300,000 people displaced by the ongoing conflict in the north and east of Sri Lanka.
The funding, which was decided upon Tuesday, is to be provided by the EU's humanitarian aid arm, ECHO.
EU Commissioner Louis Michel said: "Since the tsunami hit the coast of Sri Lanka, international attention has been focused on the victims of that catastrophe and the response of the Commission and European citizens has been massive.
"However, we should not forget that the northern and eastern parts of Sri Lanka have been a theatre for conflict for over 20 years, and that nearly 350,000 people cannot return to their homes."
The funding aims to provide shelter, food security for people returning home or relocating to new land, to improve the conditions for displaced people who continue to live in 'welfare centres' and to meet the emergency needs of those newly displaced by the escalating conflict, according to INEP agency.
Since 1983, the ongoing conflict between Tamil separatists and the government of Sri Lanka in the north and east of the country has claimed over 65,000 lives. Besides, up to 800,000 people have been internally displaced during 20 years of civil war.
Since 2004, the Commission has given a total of 59 million euros in humanitarian aid to Sri Lanka.