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"The project is to support for re-settlement and the re-establishment of the livelihood in the conflict affected people in the North," information minsiter Anura Yapa told reporters.
The project will give emergency cash support to refugees hit by the war to restart their lives, and medium support to re-build infrastructure.
The project is expected to start this month and finish by December 2011 a note submitted to Sri Lanka cabinet of ministers said.
The World Bank approved the loan on December 18.
The loan from the concessionary International Development Association window is repayable in 20 years with a grace period of 10 years.
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The loan has a 0.5 percent commitment fee on the undrawn balance, and a service charge of 0.75 percent, on the drawn down amount.
A 30-year war in Sri Lanka's north ended in May last year and over 350,000 refugees were held in internment camps at one time, pending screening for Tamil Tige