Speaker Chamal Rajapaksa announced the Supreme Court determination today in parliament.
The Supreme Court directive came in the background of attempts by the government to remove the Supreme Court Chief Justice Shirani Bandaranayake from office through a motion of impeachment.
The government was angered by an earlier ruling of the court that the 'Divi Naguma' bill, as it is called, needs to be approved by the island's nine provincial councils before being adopted in parliament.
This and other connected issues muddied the relationship between the government and the judiciary.
The Supreme Court has ruled that certain clauses of the draft bill had to be approved by a majority in the parliament as well as through a public referendum.
President Mahinda Rajapaksa's government enjoys two thirds majority in the 225-member parliament so the ruling would not adversely affect the government.
The government was looking to set up a department under the bill, which will take over the existing Poor Relief Fund Authority, the Southern Development Authority and the Upcountry Development Authority.
This would effectively give more powers to the economic development minister who is the president's younger brother, Basil Rajapaksa.
The opposition has dubbed the move as an attempt by the Rajapaksa brothers to extend their grip on the government.
The Supreme Court has also ruled that certain clauses in the Appropriation Bill 2013 which covers the 2013 budget to be unveiled this Thursday needs two thirds majority in parliament.
A civil society think tank petitioned the Supreme Court that certain sections of the bill impinged on parliament's control of finances.
Meanwhile, the parliamentary officials said the impeachment motion against the chief justice has been placed on the order book of parliament.
Speaker Chamal Rajapaksa called a meeting of the leaders of the parties represented in parliament to discuss the matter. At least 117 members of the government last week handed over the motion of impeachment against Bandaranayake, the first woman chief justice of the country.
It contains 14 charges against her and call for her removal.
The government has pressed for the impeachment of Bandaranayake despite concerns expressed against by opposition parties, civil society groups and Buddhist chief prelates.
The government of the US has urged Sri Lanka to avoid any action that would impede the efficacy and independence of the judiciary.
Colombo: Sri Lanka's top court has determined that a bill for livelihood upliftment, that is at the centre of tussle between the government and judiciary, be subject to a national referendum and a two thirds vote in parliament.
First Published: Tuesday, November 06, 2012, 18:27