Thousands of families were relocated, sometimes forcibly, by the government of former president Mahinda Rajapaksa as part of a massive beautification plan for the capital.
However, the projects are being re-evaluated by the new government.
Rajapaksa's brother Gotabaya Rajapaksa functioned as the powerful defence secretary overseeing the relocation plan.
One of the key pledges that brought new President Maithripala Sirisena to power was the promise to promote good governance that includes implementing legal processes when relocating families.
"The government has received numerous complaints from the affected people in this process and from those who are concerned about these activities," Xinhua news agency quoted acting cabinet spokesman Lakshman Kiriella as telling reporters.
Therefore, the new government has proposed the appointment of a committee comprising officials of the relevant institutions to investigate into the injustices that have been caused in this resettlement and rehabilitation process, to make suitable recommendations and to expedite payment of compensation to the affected people.
The cabinet of ministers has approved the proposal and accordingly, has decided to appoint another committee comprising three ministers to monitor the investigation committee.