Defence Ministry spokesman Prasad Samarasinghe said Israeli-built Kfir jets were on a training mission and may have broken the sound barrier causing people on the ground to hear loud blasts.
"The jets were on a training mission going from the north of Colombo to the south," Samarasinghe said, adding that booms had been heard in several places.
"In the wake of threats posed by Tamil Tiger terrorists, many civilians in the coastal areas panicked and gathered on coastal areas," the defence ministry said in a statement.
With radio stations broadcasting reports of explosions, mobile phone networks were jammed with people calling each other in a frenzy.
Stations reported hearing explosions in the northern part of the city where police and security forces had stepped up checks and road blocks amid fears that the Tigers could resort to attacks amid rising tensions.
Police chief Chandra Fernando said earlier that the authorities had suspected that a sea mine abandoned by Tamil Tiger rebels may