Earlier this month nearly 400 members of the minority Tamil community were loaded onto buses by police and evicted from the capital Colombo in a move that caused outrage among human rights groups and the international community.
The government said they were expelled as part of continuing efforts to stop the LTTE rebels infiltrating the city.
But two days later, Sri Lanka's Supreme Court ordered the authorities to halt immediately any further evictions of Tamils.
The incident highlights the current climate of fear and mistrust in a country once seen as a major tourist destination.
Heavy fighting has continued in recent weeks in the Batticaloa and Trincomalee areas in the east of the country and nearly 300,000 people have been displaced due to the violence.
Many are gathered in camps, while others are staying with friends or relatives until they can return in safety.
Some tsunami survivors, who have now moved into permanent new homes built by Christian Aid partners, have offered their now empty temporary shelters which they lived in while waiting for their new homes to be finished, to people who have been made homeless by the fighting.
As well as the risk of being caught up in the fighting, cases of abduction, extortions, disappearance, threats and intimidation of civilians continue to be reported throughout the east and north.
A ceasefire between the two sides which has been in place since 2002 is in tatters, but neither side wants officially to be the first to say it is over. Peace talks took place in 2002 and 2003, but have been stalled since then.
'There can be no military solution to this conflict. In any case a forced settlement would not address the aspirations and dignity of the Tamil minority,' said Laurent Viot, Christian Aid's representative in Sri Lanka.
'After 18 months of increasing confrontation, the conflict is taking its toll on most sections of the society whether Tamil or Sinhala'.
'Families are suffering and so is the economy. Tourists are scarce, the Sri Lankan rupee continues to depreciate and inflation is rocketing,' he added.
'There is no alternative to peace and we should look at the example of Northern Ireland to learn how bitter conflicts can be brought to an end through political negotiation.'
The fighting is destroying schools, places of worship, roads and houses including those built for and by survivors of the tsunami.
'It is also destroying the hopes of individuals,' Mr Viot said.
In the north and east of Sri Lanka Christian Aid has a large tsunami reconstruction programme. Christian Aid is also working in the south of the island on tsunami rehabilitation and long-term development work.