A Sri Lankan court on Monday ordered the release of a lawyer arrested over his alleged ties to the 2019 Easter Sunday bombings and held for nearly two years on charges rights groups say lacked evidence.

Hejaaz Hizbullah was arrested in April 2020 on suspicion of being linked to the devastating series of attacks on churches and hotels that left 279 people dead.

But after prosecutors failed to provide evidence of his involvement in the attacks, blamed on a local jihadist group, he was instead charged with inciting "racial hatred" under Sri Lanka's expansive Prevention of Terrorism Act (PTA).

The Court of Appeal said "draconian elements" of the law had been misused to keep Hizbullah detained and called on parliament to reform the act before granting him bail.

Monday's decision comes just weeks before his case was due to be discussed at the UN Human Rights Council meeting in Geneva, according to diplomats.

Dozens of rights groups have campaigned for Hizbullah's freedom, and his detention has been highlighted by the European Parliament, which has also censured Sri Lanka over its rights record.

Local rights activist Bhavani Fonseka said news of Hizbullah's impending release was "welcome", but called for reform of the PTA, which had allowed the indefinite detention.

"This (release) should not distract from the need to repeal the PTA with a clear signal from the European Union and others that token reforms will not suffice," she said on Twitter.

Hizbullah was a vocal advocate of Sri Lanka's minority Muslim community.

He earned the ire of the island nation's ruling family after successfully challenging an effort to return former president Mahinda Rajapaksa to power during a constitutional crisis in 2018.

The following year, Mahinda was appointed prime minister after his younger brother Gotabaya won presidential elections.

UN human rights chief Michelle Bachelet called for "renewed attention" to the intimidation of journalists, lawyers and activists in Sri Lanka after the Rajapaksa clan returned to power.