Sri Lanka's President has declared a state of emergency for 10 days to rein in the spread of communal violence after clashes erupted between majority Buddhists and members of the minority Muslim community.

Key points: Buddhist groups accused Muslims of forcing people to convert to Islam and vandalising Buddhist sites

Buddhist groups accused Muslims of forcing people to convert to Islam and vandalising Buddhist sites Buddhist nationalists have protested against Rohingya Muslim asylum seekers

Buddhist nationalists have protested against Rohingya Muslim asylum seekers Muslims make up 9 per cent of Sri Lanka's 21 million people

Tension has been growing between the two communities in Sri Lanka over the past year, with some hardline Buddhist groups accusing Muslims of forcing people to convert to Islam and vandalising Buddhist archaeological sites.

"At a special Cabinet meeting, it was decided to declare a state of emergency for 10 days to prevent the spread of communal riots," spokesman Dayasiri Jayasekara said.

He said some people were instigating violence through Facebook and warned of tough action against them.

A tweet from the office of President Maithripala Sirisena said the decree would "redress the unsatisfactory security situation prevailing in certain parts of the country".

It said the country's security forces "have been suitably empowered to deal with criminal elements in the society and urgently restore normalcy."

The unrest in the Indian Ocean island's central district of Kandy began on Sunday after the funeral of a truck driver from the majority Sinhalese Buddhist community, who died days after he was involved in an altercation with four Muslims, the Government said.

Buddhist mobs swept through towns, burning at least 11 Muslim-owned shops and homes.

Police fired tear gas into the crowds, and later announced a curfew.

These areas remained under curfew on Tuesday, with soldiers and police patrolling the streets and no-one allowed outside.

So far no violence has been reported in other parts of the island nation.

While government officials did not specifically mention Buddhist extremists, many comments appeared aimed at them.

The Government will "act sternly against groups that are inciting religious hatred," Cabinet minister Rauff Hakeem said after a meeting with the President.

Buddhist nationalist have also protested against the presence in Sri Lanka of Muslim Rohingya asylum seekers from mostly Buddhist Myanmar, where Buddhist nationalism has also been on the rise.

Buddhist mobs swept through the town of Kandy, burning at least 11 Muslim-owned shops and homes. ( AP: Pradeep Pathiran )

Sri Lanka has long been divided between the majority Sinhalese, who are overwhelmingly Buddhist, and minority Tamils, Muslim and Christian.

Of Sri Lanka's 21 million people, about 70 per cent are Buddhists, 9 per cent Muslims, and 13 per cent ethnic Tamils, most of whom are Hindus.

The Government ended a 26-year civil war in 2009 with the defeat of Tamil separatist rebels.

Muslim communities were occasionally caught up in that violence but on the whole, Muslims managed to stay out of the war.

Reuters/AP