Its powers would include rebuilding the war-ravaged economy, resettlement of people and the provision of essential services.
"It was clear that the structures we had put in place were too cumbersome and too distant from the people to be acceptable or to react quickly enough," Wickremesinghe said.
He added that since the new structure needed to safeguard the interests of all communities in the northeast, a Muslim delegation should join the peace talks when they resume.
In a move to reassure the Tigers and donors that aid money would be used effectively, Wickremesinghe said the government would also set up a new body to implement foreign-funded projects.
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