Anuradhapura district secretary R.M. Wanninayake said the project would be suspended pending further discussions.
Farmers protesting against the project clashed with police yesterday (28) in Thambuttegama town.
Police say four policemen were admitted to hospital with injuries, while 59 protestors were arrested.
Water for drinking and farming,
an issue in dry zone
Wanninayake said the project was planned to supply drinking water to Thambuttegama, Nochchiyagama and Eppawala areas.
He described as baseless certain media and social media claims that the waters of Rajanganaya reservoir were to be used for a water bottling business by a Chinese company.