A foreign ministry statement said that the government was ending the "restrictive practice".
"The Government has issued a circular today ending the restrictive practice of preventing the issuance of passports to Sri Lankan citizens resident abroad who were compelled to leave Sri Lanka due to political persecution," it said.
The Rajapaksa government in March 2011 had issued instructions to all its missions abroad to refrain from issuing Sri Lankan passports to citizens who have sought asylum due to political persecution in the country.
It has also caused immense hardship and difficulty to many Sri Lankans who were forced to leave the country as a result of their struggle against authoritarian rule, it said.
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The Sri Lankan government has renewed its commitment to upholding citizens rights and the rule of law. Freedom of movement and impartial treatment of our citizens, irrespective of their political beliefs, will be secured for all our citizens, the statement said.
The government has indicated it was considering an Office of Missing Persons, a Truth, Justice, Reconciliation and Non-Recurrence Commission, a Judicial Mechanism with a Special Counsel and an Office of Reparations as part of the reconciliation mechanism.
The Sirisena government has also released some of the Tamil civilian land held by the military during the 30-year conflict with the LTTE, that finally ended in 2009.
The foreign ministry said that as a result of the good governance and reconciliation efforts of the Sirisena government, many Sri Lankans living abroad have expressed interest in visiting and investing in Sri Lanka.
The previous government had said the restrictions were necessary as those who fled the country were supporters of the Liberation Tigers of Tamil Eelam (LTTE).
However, there were a few journalists and rights activists from the Sinhala-majority community who fled the country fearing political persecution by then government.