A senior US diplomat has warned that Sri Lanka's failure to share power with minority Tamils after the end of the war could lead to renewed violence.
The US assistant secretary of state for South Asia told AP news agency that Sri Lanka should give more freedom to the 300,000 Tamils displaced by the war.
Robert Blake said it was wrong that many were indefinitely confined to government-run camps in the north.
The refugees were being held "against their will", Mr Blake said.
The Sri Lankan authorities say they do plan to let civilians return home, but must screen them first to identify rebel fighters.
Mr Blake expressed disappointment at President Mahinda Rajapaksa's reluctance to pursue political reconciliation until after presidential elections are held, probably in January.
"The government needs to find a way to move more quickly than January 2010," he said.
"Because the risk, of course, is that people will become disaffected and that will give new impetus to terrorism."
Some 300,000 ethnic Tamils are being held in camps in Sri Lanka
He said the government had to take steps to make Tamils feel they were part of the political process, after the end of the country's lengthy civil war in May.
He said that it was important that the government allowed more freedom of movement for nearly 300,000 Tamils displaced by the war and confined to government camps.
Mr Blake said some progress had been made over this issue - about 10,000 displaced people had been allowed to leave the camps and 40,000 more are due to leave later this month.
"But most are not allowed to leave," he said, "and it's important for them to have this freedom of movement."
Longer term reconstruction assistance was dependent on progress being made on this issue and on setting up a power sharing arrangement, he said.
On Monday, Amnesty International also urged Sri Lanka's government to set free hundreds of thousands of Tamil war refugees detained in camps.
The human rights group says their continued internment is a breach of international human rights covenants.