The state-owned English-language paper, the Daily News, said the cash-strapped government will give bonuses to big families.
The comments by hawkish Prime Minister Ratnasiri Wickremanayake drew fire Tuesday from political analysts who said they warranted a clarification of government policy toward the 18-year conflict that has claimed an estimated 64,000 lives.
Wickremanayake blamed the country's highly successful Small Families Campaign, launched in the 1970s, for the poor response to army recruitment drives, the independent Sinhalese-language Divaina newspaper said.
"It is because people believe in the small family concept that we do not have the extra 10,000 troops needed to finish off the ethnic war quickly," Wickremanayake, a 68-year-old father of three, was quoted as saying. He also said the country suffered from a shortage of Buddhist monks.
The army frequently woos new recruits to fill ranks depleted by desertions and casualties from fighting the rebels, who have been battling for an independent Tamil state in Sri Lanka's north and east since 1983, but often gets only a lukewarm response.
Last year, 1,464 military personnel died in the conflict.
Military commanders and government politicians have in the past said a manpower shortage was the only obstacle in the way of victory and earlier this year Wickremanayake personally led a campaign to urge men to enlist as soon as they turned 18.
Wickremanayake's office confirmed the remarks had been made Sunday at Bathalegala, about 50 miles east of the capital Colombo, but said they were intended for a rural audience.
"The Prime Minister's remarks were more suggestions than statements of policy," Wickremanayake's press secretary, Seelaratne Senarath, said.
But political analysts said the speech could not be taken lightly because of its implications for a Norwegian-brokered peace bid that has stalled over a rebel demand that a ban on their organization be lifted before talks begin.
"A clarification is due because the remarks by a well-known hard-liner commit the country to a protracted conflict at the time when the peace process is in crisis," said Kethesh Loganathan, of the Colombo-based Center for Policy Alternatives. "This is an indication of division, drift and aimlessness in government policy on war and peace."
The Daily News quoted Wickremanayake as saying it was time for "all Sri Lankan families to concentrate on producing more offspring" and ignore the "small is beautiful" slogan which has led to one of the lowest fertility rates in the developing world.
The government's Family Health Bureau said it was not aware of any change in official policy on family planning.
The island nation of 20 million people, with a life expectancy of more than 70 years, plans its firscensus in two decades next month, a count expected to confirm forecasts of an aging population, which grew just 1.4 percent in 1999.
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