Sri Lanka's Archaeology Department has blocked the development of the Aathy Iyanar temple in Vedukkunaari Malai, Nedunkeni-Olumadu in Vavuniya district.
Residents had sought to worship and carry out building works on the temple on Vedukkunaari Malai ahead of the temple's annual festival from September 7 to 9.
However, Department officials have informed Nedunkeni police that it would be prohibited and that residents could build a temple 400m away from the original site.
Tamils pray at ancient mountain Hindu temple
Last month the Archaeology Department had acquired a large swathe of land in Nedunkerni which encompassed the temple lands and banned civilians from accessing it.
Angered residents and worshippers protested against the take over last month, launching a demonstration outside the Vavuniya North Divisional Secretariat on August 21.