''We will move to arrest about another eight to 10 men,'' Inspector of police P.S.C. Sanjeewa told Fairfax Media in the coastal city of Matara. ''We are gathering evidence to arrest.''

He confirmed some of those under investigation are serving in the navy.

Fairfax newspapers reported on Friday that a senior naval officer, Lieutenant-Commander Sanjeewa Annatugoda had briefed the head of Australia's border protection command, Rear Admiral David Johnston, on counter-smuggling operations, at the same time as he was allegedly a key player in Sri Lanka's largest smuggling ring.

Commander Annatugoda may even have been brought to Australia to be briefed on anti-people smuggling measures, said Immigration Minister Scott Morrison.

''I am advised that there was no information provided at that briefing that might have assisted him with his alleged criminal activities.''

Despite the arrest of four sailors, including Commander Annatugoda, and a suspicion that others serving in the navy are also working with people smugglers, Mr Morrison said there was no evidence naval co-operation in the illegal trade was systemic.

''I wouldn't be leaping to any conclusion at this point … what this incident shows is it doesn't matter who you are. When we work with our partners to track down people involved … there are no exceptions. It doesn't matter what business you're in, or what position you hold, when we're going after people smugglers, we're going after people smugglers.''

In Colombo for the Commonwealth Heads of Government meeting, Tony Abbott said he would thank the government of Sri Lanka for its help in fighting people smuggling. ''We have very good and close co-operation with the Sri Lankan government and the Sri Lankan Navy when it comes to stopping the boats,'' he said.

Australia provides several million dollars a year in materiel support and training for the Sri Lanka Navy.

Thirty-one men have been arrested as part of what is regarded as the largest and most profitable smuggling ring in Sri Lanka. The gang made millions of rupees (tens of thousands of dollars), charging passengers between 300,000 ($2450) and 800,000 rupees ($6500) for each place on a boat to Australia.

It has been reported the ring was responsible for sending up to 6000 people in boats towards Australia. Since the arrest of Commander Annatugoda and the 30 other members of the racket, the number of boats leaving Sri Lankan shores for Australia has dropped by 90 per cent.

Three others among the arrested are serving sailors from the signals branch, and another, Kuruppumullage Deshapriya, is a former naval officer.

Commander Annatugoda denies the allegations of people smuggling, saying he has been framed because of a personal vendetta.

Mr Abbott praised Sri Lanka for its efforts to address human rights matters and allegations of war crimes. He said it had emerged from a brutal civil war committed to democratic pluralism based on the rule of law.

''With peace has come more freedom and more prosperity. We are here to praise as much as to judge,'' he told the meeting's opening forum.

Mr Abbott said the Sri Lankan government had made public commitments to postwar reconciliation. ''My understanding is that Sri Lanka is doing its best to honour those.''

Other Commonwealth prime ministers, notably Britain's David Cameron and Canada's Stephen Harper, have condemned Sri Lanka's reconciliation efforts and human rights abuses since the end of its civil war in 2009. But Mr Abbott said Sri Lanka had made significant progress.

Handing over the chairmanship of CHOGM to Sri Lanka, Mr Abbott said the establishment of the Commonwealth charter, which promotes democracy, human rights and the rule of law, was Australia's ''great achievement'' for the Commonwealth.

''The important thing is for each country to strive to be its best self.''

Critics of the Sri Lankan regime say the charter is being trashed by the country's being awarded the Commonwealth chairmanship, as it faces persistent allegations of human rights abuses, including enforced disappearances, land seizures, torture and extrajudicial killings.