A police officer was killed and another critically wounded Sunday when troops opened fire on an undercover unit during a drug raid at a hotel in Sri Lanka, local police said.

The unit was part of a major anti-narcotics drive codenamed "Yuktiya," or justice, which police said had resulted in over 17,000 arrests in the past three weeks.

The undercover officers were at a beach hotel in Weligama, a popular surf spot on the island nation's southern coast, a police officer told AFP by phone, speaking on condition of anonymity. 

Army troops deployed to reinforce local police in the anti-drugs campaign rushed to the area to investigate an unrelated shooting and opened fire at a van speeding away from the scene, the officer said.

"They did not realize that there were officers from the Colombo Crime Division in the van leaving the hotel," the officer said, adding that an investigation was underway.

It was the first fatality reported since a major crackdown on the narcotics trade was launched on 10 December.

The raids were paused for two days for Christmas as police were deployed for other security duties, but the campaign resumed after the holiday.

The cordon-and-search operations, carried out by police with the help of heavily armed troops, and mass arrests have provoked allegations of rights violations.

Rights activist Ambika Satkunanathan posted on social media that the searches were not based on evidence but were "targeting only poor areas". 

Police were arresting drug users and small-time dealers but "not focusing on large-scale traffickers", she added.