The unexpectedly strong showing could lead to defections away from the centre-left party led by President Maithripala Sirisena, a partner in the country's coalition government, analysts said, creating instability in the legislature.
"These results show people want a change now", said Mr Rajapaksa, after his Sri Lanka Podujana Peramuna (SLPP) won control of 231 local councils out of a total of 340.
According to reports the President had urged the Prime Minister to resign and make way for a new Prime Minister from the UNP in order to continue with the unity Government.
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After a surprise defeat at the hands of his former cabinet colleague Sirisena, Rajapaksa is making a comeback of sorts by rallying his support base of rural Sinhala Buddhists, who form the majority of the country's population, noted Reuters.
While the election is scheduled to be held only in 2020, the president can dissolve the parliament if over two-thirds of the members pass a resolution to that effect.
"The parliament is likely to see defections and Rajapaksa will call the shots", Kusal Perera, a local political columnist told Reuters.
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The government has promised a new constitution that devolves power, the facilitation of an worldwide probe into alleged war crimes during the final phase of a 26-year civil war, IMF-backed fiscal discipline and post-war reconciliation.
Following the meeting with the President, Prime Minister Wickremesinghe met UNF's coalition members and representatives of other parties represented in Parliament on the same evening and chose to form a UNF government without the SLFP. It now has 106, but needs 113 for a simple majority.
The meeting was attended by Prime Minister Ranil Wickremesinghe, UNP Ministers, Deputy Ministers and State Ministers.
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