58-year-old Kumaran Pathmanathan alias KP, was no longer in detention and was free to carry out work for a charity he had formed, said Lakshman Hulugalle, the head of the Defence Ministry's media centre.
"Practically, there is no detention now," Hulugalle told reporters in Colombo when asked how Pathmanathan, who has an Interpol arrest warrant initiated by India against him, was living in the island's north.
"He is running a non-government organisation and doing work for the benefit of the people... And he is free to do his work," Hulugalle said. "There is no court case against him."
The official added, "He has every right to operate from that area more so because his NGO is going to get involved in the development of the area.
"It is a major victory for us that someone who had worked against us previously as a leader of the Tamils has now agreed to be a partner in development."
Pathmanathan, who succeeded Velupillai Prabakaran, is wanted by India in connection with the case regarding assassination of Rajiv Gandhi in 1991. He was then LTTE's chief procurer of weaponry.
He declared himself the leader of the LTTE when it was announced that Prabakaran had been killed in the final battle against the government troops in May 2009.
Sri Lanka had announced the arrest of KP in Malaysia several months in to the end of the conflict and since then he had spent time under government custody.
