The charity, which is run by British architect Cameron Sinclair ( pictured), was working to help the post-tsunami construction effort before the war between government troops and the Tamil Tigers restarted.
Cameron said the renewed conflict has left the organisation with little choice but to pull out.
His organisation is working on several schemes in the area, such as transitional and emergency schools for displaced and homeless children.
One such project, which was developed in conjunction with Relief International, helped to bring 1,200 children back into education.
'But in the north of the country, this kind of work has now been abandoned. Unfortunately, civil unrest has reared its ugly head and returned to the island in an abrupt and violent way,' said Sinclair.
'It is with a heavy heart that we are stopping all further projects.
'However, our work is not finished and we continue full speed ahead with our projects in the south,' he added.