The Tamil National Alliance said in a statement they were "shocked" by the extent to which the draft framework "curtails civil liberties, erodes judicial control over the state security apparatus and the staggering potential for abuse and torture."
The party, however, said they were not opposed to a legal framework per se against terrorism.
"We are unequivocally committed to supporting a legal framework that would prevent and punish acts of terrorism in a manner that is lawful, in compliance with fundamental rights and the rule of law," it said.
The proposed Counter Terrorism Act (CTA) is to replace the current Prevention of Terrorism Act, which was enacted in 1979 to deal with the growing Tamil separatist militancy.
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The PTA has been criticised by Tamil and rights activists as it allows indefinite detention of people without charges.
During the over three-decade armed campaign by the Liberation Tigers of Tamil Eelam (LTTE), many activists of the rebel organisation were held under the PTA.
But according to a proposal by Prime Minister Ranil Wickremesinghe, the CTA aims at ensuring full compliance with Sri Lanka's rights obligations while dealing with terrorism.
"The definitions are also exceedingly vague and indeterminate, and would would have a chilling effect on advocacy in favour of greater diversity in Sri Lanka," it said, adding that the current government was under pressure from international rights watchdogs to repeal the "draconian" Prevention of Terrorism Act (PTA).