Presidential advisor on trade unions, Bharatha Lakshman Premachandra was allegedly shot dead by MP Duminda Silva's faction at Kotikawatta, northern Colombo.
Silva is a member of the ruling regime, who has a close working relationship with the Defence secretary, Gotabhaya Rajapakse.
Silva is currently in a critical condition in hospital, according to reports. At least 10 others were injured.
The government's response has been to deploy the army and the special task force to the area and introduce a curfew.
Kotikawatta is one of the 23 councils which went to polls today in the last phase of the local government election, which began in March.
Violence has frequently marred elections in Sri Lanka with over 50 incidents of malpractice, including voter intimidation having been reported so far to election monitors.
The local government elections held in the North-East in July, resulted in a resounding victory for the Tamil National Alliance.
See our earlier post: 'Tamils endorse self-rule mandate - again' (July 2011)