After coming to power, Jayewardene directed the rewriting of the constitution. The document that was produced, the new Constitution of 1978, drastically altered the nature of governance in Sri Lanka. It replaced the previous Westminsterstyle , parliamentary government with a new presidential system modeled after France, with a powerful chief executive. The president was to be elected by direct suffrage for a six-year term and was empowered to appoint, with parliamentary approval, the prime minister and to preside over cabinet meetings. Jayewardene became the first president under the new Constitution and assumed direct control of the government machinery and party.

The new regime ushered in an era that did not auger well for the SLFP. Jayewardene's UNP government accused former prime minister Bandaranaike of abusing her power while in office from 1970 to 1977. In October 1980, Bandaranaike's privilege to engage in politics was removed for a period of seven years, and the SLFP was forced to seek a new leader. After a long and divisive battle, the party chose her son, Anura. Anura Bandaranaike was soon thrust into the role of the keeper of his father's legacy, but he inherited a political party torn apart by factionalism and reduced to a minimal role in the Parliament.

The 1978 Constitution included substantial concessions to Tamil sensitivities. Although TULF did not participate in framing the Constitution, it continued to sit in Parliament in the hope of negotiating a settlement to the Tamil problem. TULF also agreed to Jayewardene's proposal of an all-party conference to resolve the island's ethnic problems. Jayewardene's UNP offered other concessions in a bid to secure peace. Sinhala remained the official language and the language of administration throughout Sri Lanka, but Tamil was given a new "national language" status. Tamil was to be used in a number of administrative and educational circumstances. Jayewardene also eliminated a major Tamil grievance by abrogating the "standardization" policy of the United Front government, which had made university admission criteria for Tamils more difficult. In addition, he offered many top-level positions, including that of minister of justice, to Tamil civil servants.

While TULF, in conjunction with the UNP, pressed for the allparty conference, the Tamil Tigers escalated their terrorist attacks, which provoked Sinhalese backlash against Tamils and generally precluded any successful accommodation. In reaction to the assassination of a Jaffna police inspector, the Jayewardene government declared an emergency and dispatched troops, who were given an unrealistic six months to eradicate the terrorist threat.

The government passed the Prevention of Terrorism (Temporary Provisions) Act in 1979. The act was enacted as a temporary measure, but it later became permanent legislation. The International Commission of Jurists, Amnesty International, and other human rights organizations condemned the act as being incompatible with democratic traditions. Despite the act, the number of terrorist acts increased. Guerrillas began t457 to hit targets of high symbolic value such as post offices and police outposts, provoking government counterattacks. As an increasing number of civilians were caught in the fighting, Tamil support widened for the "boys," as the guerrillas began to be called. Other large, well-armed groups began to compete with LTTE. The better-known included the People's Liberation Organization of Tamil Eelam, Tamil Eelam Liberation Army, and the Tamil Eelam Liberation Organization. Each of these groups had forces measured in the hundreds if not thousands. The government claimed that many of the terrorists were operating from training camps in India's Tamil Nadu State. The Indian government repeatedly denied this claim. With the level of violence mounting, the possibility of negotiation became increasingly distant.

Data as of October 1988