Army officials say the Nanthikadal lagoon is now open for fishing, but a Tamil political party disputed the government’s claim.
Sri Lankan forces defeated separatist Tamil Tiger rebels in May 2009 after 26 years of civil war.
Rights groups have accused the army and rebels of abuses at the end of the war.
The government has rejected such claims, but there have been conflicting accounts about the death of the feared and reclusive Tamil Tiger leader.
The army said he was killed in battle but human rights groups said he might have been killed after surrendering. It was by the Nanthikadal lagoon that the army put his body on display.
The lagoon gained a sort of gruesome notoriety, the BBC’s Charles Haviland in Colombo reports, as it was between this body of water and the sea that hundreds of thousands of civilians were trapped for months.
Many suffered death or grievous injury as the army attacked the Tigers who used violence to prevent people leaving, our correspondent says.
The army says more demining is necessary but Tamil politicians say the area contains mass graves.
The US has tabled a resolution at the UN Human Rights Council, currently meeting in Geneva, calling on Sri Lanka to implement recommendations of an internal inquiry into the conduct of the civil war.
Sri Lankan officials say they are confident of defeating the resolution at the Geneva sessions.