The US embassy here said they were giving equipment and supplies to ex-fighters while vocational training was also being made available to help them start small enterprises in the island's east.
"The project, implemented by the International Organization for Migration (IOM), is part of USAID’s larger efforts to increase human security and stability in the Eastern Province," the embassy said in a statement.
It said nearly 400 former fighters had already signed up for the assistance, which will be given in the districts of Trincomalee, Batticaloa and Ampara.
The IOM said the two-year initiative would cost 1.2 million dollars a year.
Government forces crushed the separatist Liberation Tigers of Tamil Eelam (LTTE) in May after killing the group's top leadership in the island's north. The LTTE was driven out of the east of the island in mid-2007.
Sri Lanka's government is also launching an ambitious rehabilitation program for thousands of rebels who surrendered during the final