Sri Lanka Cricket (SLC) secretary K. Mathivanan said an agreement would be signed next week with the island's foreign investment regulator to develop a stadium at Pallekele, near Kandy.
The stadium would be ready by 2011, when Sri Lanka co-hosted the World Cup with South Asian neighbours India, Pakistan and Bangladesh, Mathivanan told AFP on Monday.
The SLC would invest money and the work was expected to start after the 2007 World Cup in the West Indies, he said. The cost of the project is still unknown.
"We will try and play first class cricket on the ground as soon as it is ready to host matches," Mathivanan said. "A pitch, outfield and other infrastructure needs to be constructed."
The objective of developing a new stadium at Pallekele was to drop the Asgiriya as an international venue, he said.
Asgiriya, a regular Test centre since 1983, is widely acclaimed as one of the most picturesque cricket grounds in the world. It has hosted 19 international Test matches so far.