Sri Lanka's president promised Thursday to use his new powers under a constitutional revamp to grow the economy and heal ethnic divisions, as observers worried about the island's fragile democracy.

The national parliament on Wednesday voted in favour of the 18th amendment to the country's constitution, scrapping a two-term limit on the presidency and widening President Mahinda Rajapakse's control of the state.

The president's office said Rajapakse was "pleased" with the parliamentary endorsement, which is another success for the 64-year-old populist leader after a string of recent electoral successes.

"The president will use the extra time he has for post-war economic development and to forge ethnic reconciliation," Rajapakse's office said in a statement.

As well as allowing him to stand in the 2016 polls, the amendment also hands Rajapakse greater control over previously quasi-independent institutions such as the judiciary, police, election commission and central bank.

"This is not a way of politicising these institutions, but a way to ensure better governance, that effective people are appointed to the commissions," Foreign Minister Gamini Lakshman Peiris told reporters on Thursday.

The changes have been condemned by lawyers, rights groups, leading opposition figures and some religious groups, which see them as part of the country's slide into autocracy.

Rajapakse was already an executive president, giving him vast powers as head of state and the head of the government, with three of his brothers holding powerful public positions.

"We are not going in for a dictatorship. If the president wanted to be a dictator, he has enough powers without amending the current constitution to do so," Housing Minister Wimal Weerawansa told parliament on Wednesday.

The head of rights group Transparency International in Sri Lanka, J.C. Weliamuna, was highly critical, however, saying Rajapakse had systematically weakened civil society, the opposition and the media over the past three years.

"He has unlimited powers now. That's dangerous," Weliamuna said.

Paikiasothy Saravanamuttu, executive director of local think-tank the Centre for Policy Alternatives, said the constitutional change was "used to consolidate power, without rebuilding governance structures.

"It's a setback for democracy. Parliament is now a rubber-stamp institution, It's a dark period for us," he said.

The reforms were debated on Wednesday and then passed with 161 in favour and 17 against in the 225-member parliament. The main opposition United National Party (UNP) boycotted the debate, saying it did not want to be "contaminated."

Rajapakse's electoral success has been attributed to his carefully cultivated image as a war hero president and his stewardship of the economy, which has boomed in the last 18 months.

He ordered a huge military offensive against the Tamil Tiger rebels during his first term, which wiped out the decades-old insurgency, but he has since been dogged by allegations of war crimes.

"Parliament transcended political barriers and understood the need to strengthen the president's hand, to rebuild the nation, to improve living standards," Plantations Minister Mahinda Samarasinghe said Thursday.

"This (amendment) was done to ensure a terrorist organisation never raises its head," he told reporters at a press conference, adding the government was committed to "reconstruct and develop" the war-ravaged north and east.

National reconciliation is now seen as a priority after the war, which pitted the Sinhalese ethnic majority against the Tamil minority.

Rajapakse has repeatedly promised to heal the ethnic division, which analysts say would require a political solution that at least partly satisfies the Tamil desire for autonomy.

"He has the political power to do so, the question is whether he has the political will to do so," said Harim Peiris, a lawyer and a former presidential spokesman.