The UK says it is still in discussion over Mr Browne's role
Sri Lanka has rejected the British PM's nomination of a former defence secretary, Des Browne, as his special envoy to the country.
It said the nomination of Mr Browne was "a disrespectful intrusion".
PM Gordon Brown had said Mr Browne would work closely with the Sri Lankan government and community leaders.
But President Mahinda Rajapaksa and his cabinet said the appointment was "unhelpful" and was made without consulting them.
A foreign ministry statement said the appointment was tantamount to an "intrusion of Sri Lanka's internal affairs".
"Further, the cabinet perceived that this would be a hindrance in pursuing a sustainable solution to the conflict in terms of a Sri Lankan agenda," it said.
Correspondents say that Colombo's rejection of Mr Browne is an embarrassment for the British government, especially because Sri Lanka has accused the UK - its former colonial power - of "unilaterally" appointing him.
Sri Lanka's government says more civilians are fleeing rebel-held areas
A Downing Street spokesman told the BBC that dialogue over Mr Browne's role was still taking place with Sri Lanka and that it still hoped he could work with all sides to secure a peace agreement and alleviate further suffering.
But Foreign Minister Rohitha Bogollagama warned of "major repercussions" for relations with Britain over his nomination.
"There is no further discussion with London on the matter," Mr Bogollagama told the AFP news agency.
The Media Minister Anura Yapa said the government had voiced its "displeasure" to the British High Commission in Colombo.
Des Browne's new job has also brought criticism from the political opposition in Britain.
Speaking for the Conservatives, Liam Fox, said it was a further example of Gordon Brown's incompetence as prime minister.
"Having presided over calamitous damage to our economy," said Mr Fox, " he is now making a complete mess of relations with friendly countries overseas."
The Liberal Democrats criticised Gordon Brown for not taking tougher action on Sri Lanka, by seeking a ceasefire in through diplomatic channels at the United Nations.
Tens of thousands of civilians are still believed trapped in fighting between the army and Tamil Tiger rebels in the north-east.
The defence ministry has said that hundreds more Tamil civilians have fled the war zone, while others trapped by the fighting are being used as "human shields" by the rebels.
The Tigers have in turn accused the army of shelling civilian areas including hospitals.
About 50,000 soldiers are pressing the Tamil Tigers into a patch of north-eastern jungle after taking the key areas of Kilinochchi, Elephant Pass and Mullaitivu.
The government has rejected international calls for a ceasefire, demanding the rebels lay down their arms.
The Tigers have said they will not do so until they have a "guarantee of living with freedom and dignity and sovereignty".