A minister warns that if the "madness" of illegal structures is not curtailed "we are going to end up with a bigger disaster".
At least 203 people have been killed and hundreds of thousands are displaced after flooding and mudslides hit large swathes of Sri Lanka.
More than 1,500 homes have been destroyed and 16 hospitals evacuated since heavy rains began to hit southern and western areas of the island on Friday.
Sri Lankan disaster management minister Anura Yapa said many of the victims would have survived had their homes not been built on slopes.
Vowing to demolish all illegal structures, he said: "If we don't stop this madness, we are going to end up with a bigger disaster very soon.
"About 30-40% of this disaster is due to illegal constructions.
"The local councils should never have allowed homes to be built on (landslide-prone) mountain slopes."
Mr Yapa said residents in the worst-hit Ratnapura and Kalutara districts had ignored repeated warnings to evacuate.
He said: "We have a cultural issue where people don't accept that they are at risk.
"We are also considering laws to force people to leave when evacuation warnings are issued by the Disaster Management Centre."
Divers and navy personnel from India are helping Sri Lanka's army, navy and air force with relief and rescue efforts.
More than 600,000 people remain temporarily homeless after the landslides and floods, the worst to hit Sri Lanka in 14 years.
With a lack of temporary shelters, many displaced people are at risk of contracting mosquito-borne dengue fever and other diseases, the UN said.
Government spokesman Rajitha Senaratne said medical teams were being deployed to prevent the spread of waterborne diseases.
Some 24 countries have pledged support and Australia, Japan and Pakistan are among those to have donated supplies, including water purification tablets and tents.
Foreign minister Ravi Karunanayake said the government had been "moved by the spontaneous response".
The flooding is the worst since to hit the island since May 2003, when 250 people were killed and 10,000 homes destroyed.
Last year, a landslide killed more than 100 people in central Sri Lanka.
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